Strategy | Sustainability | Leadership and governance | Financial information
2
Contents
About AkzoNobel
2023 results at a glance
CEO statement
How we created value
Strategy and operations
Sustainability statements
Leadership and governance
Financial information
3
4
5
7
11
18
59
105
Disclaimer: This PDF of AkzoNobel’s annual report is derived from the
official version of the company’s Report 2023. The European Single
Electronic Filing format (the ESEF reporting package) is the official
version. The ESEF reporting package is available on our website. In case
of discrepancies between this PDF version and the ESEF reporting
package, the latter prevails. The auditor’s report and limited assurance
report of the independent auditor included in this PDF version relate only
to the ESEF reporting package.
In September 2023, we revealed Sweet Embrace
as our 2024 Color of the Year. The pastel pink
shade, identified by our in-house color experts
and a team of international design professionals,
is perfect for creating the calm and welcoming
spaces so many of us crave.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
3
ABOUT AKZONOBEL
Let’s paint
the future together
Ever since we first lifted the lid on our paints and coatings in 1792, we’ve been coloring people’s lives
and protecting what matters most. From deep underground, to homes, cities, transport and even outer
space, we use our expertise and sustainable solutions to enhance and sustain the fabric of everyday life.
For us, every layer tells a story. So we focus on making the things you see and use every day do more
than expected. We want to make the ordinary extraordinary, which means our sights are set on opening
up a world of possibilities – and seeing potential where others can’t. Because every surface is an
opportunity and every challenge sparks our creativity.
It’s about preserving the best of what we have today – and creating an even better tomorrow.
Let’s paint the future together.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
4
2023 RESULTS AT A GLANCE
REVENUE BY DESTINATION
North America
13%
EMEA
47%
Latin America
12%
North Asia
16%
South Asia Pacific
12%
SUSTAINABLE SOLUTIONS
39%
ADJUSTED EBITDA*
€1,429 mln
Sustainable solutions development in % of revenue
Adjusted EBITDA development* in € millions
39 / 39 / >50
2022
2023
2030
1,436 / 1,157 /1,429
2021
2022
2023
Financial summary
€10,668 mln revenue
€1,029 mln operating income
€1,074 mln adjusted operating income*
€2.59 earnings per share
35,200 employees
RETURN ON SALES (ROS)*
10.1%
RETURN ON INVESTMENT (ROI)*
13.0%
Return on sales development* in %
Return on investment development* in %
11.4 / 7.3 / 10.1
2021
2022
2023
AkzoNobel Report 2023
16.0 / 9.8 / 13.0
2021
2022
2023
* Alternative Performance Measures (APMs). AkzoNobel uses APM adjustments to the
IFRS measures to provide supplementary information on the reporting of the
underlying developments of the business. APMs include, but are not limited to,
adjusted operating income, (adjusted) EBITDA, adjusted earnings per share, ROS and
ROI. A reconciliation of the Alternative Performance Measures to the most directly
comparable IFRS measures can be found in Note 3 of the Consolidated financial
statements.
Strategy | Sustainability | Leadership and governance | Financial information
5
CEO STATEMENT
2023 was a year in which AkzoNobel
delivered a clear rebound in performance
after a disappointing 2022. Our volumes
stabilized – despite continuing volatility in
some of our markets – our profits
rebounded on resilient pricing and the
first effects of raw material deflation,
while our efforts to transform our
company gathered pace. This allowed us
to absorb persistent global inflation and
unfavorable currency effects to beat the
targets we’d set ourselves at the
beginning of the year.
Most of our end markets seemed to bottom out in the
second half of 2023, and some areas actually showed
robust growth trends. This was true for our Powder
Coatings business, which recovered well in the second
half of the year from a construction-driven downturn.
Results for Decorative Paints in EMEA (Europe, Middle
East and Africa) reflected a stabilization in volumes and
continuing pricing power, while Deco in China grew
volumes in a more challenging pricing environment. Our
Coatings businesses in China performed well
throughout.
For our Industrial Coatings business, metal coatings
markets (coil, packaging) stabilized globally after a
tough start to the year, which left wood coatings as the
main segment under continuing volume pressure.
Finally, stalwarts such as Aerospace Coatings, Marine
and Protective Coatings and Vehicle Refinishes – which
benefit from strong macro trends – continued to
perform well.
Progress on margin management was a key contributor
to our performance, as we demonstrated discipline and
stickiness with our pricing. Raw materials were a
headwind in the first half of the year as we traded out
expensive inventory, but this trend reversed in the
second half and we expect it to continue until at least
the first half of 2024. With regard to operating
expenses, driving down costs in response to inflation
was a key priority on which we delivered, in line with our
target set at the beginning of 2023. This helped us
absorb persistent global inflation and finished goods
write-offs as we cleaned up our inventories, while
delivering almost €300 million (+24%) more adjusted
EBITDA than in 2022, despite close to €100 million of
adverse currency effect.
We also demonstrated cash discipline, with strong
collection and a firmer grip on our inventories as we
continue to drive working capital back down towards
normative levels of around 13% of revenue. The
combination of higher profits, working capital
management and the decision to not proceed with the
Kansai Paints Africa transaction allowed us to be
significantly ahead of our deleveraging targets by the
end of 2023, at 2.7x net debt to EBITDA – well on our
way to our normative level of around 2x which we intend
to retain in the mid-term.
We also took decisive action to unlock the significant
value we can gain by improving our industrial
operations. An industrial excellence plan is underway,
focused on reducing complexity, improving capacity
utilization and investing in the modernization of our sites.
We believe there’s significant value to be gained, as
indicated by our €250 million incremental profit
ambition, and this plan is a key long-term strategic
priority for us. You can read more about it in the
Strategy pages.
In August, we completed the acquisition of the Huarun
business in China. The renowned decorative paints
brand has a long history and is well recognized. The
transaction will further boost our position in the region,
enable further market segmentation and reinforce our
position outside of the premium segment.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
6
CEO STATEMENT
Meanwhile, the integration of the Grupo Orbis activities
we acquired last year continued to gather pace, with
2023 being the first year that the Colombia-based
organization fully contributed to the results of our
business in Latin America. As noted earlier, we opted
not to proceed with the Kansai Paints Africa transaction,
directing our efforts towards the integration of recent
acquisitions and enhancing our balance sheet to regain
capital allocation flexibility.
Sustainability and innovation remained high on the
agenda, highlighted by the launch of several pioneering
products designed to help our customers become more
efficient and reduce their carbon emissions. These
included Interpon D1036 Low-E – a low-energy
architectural powder coating – and a new generation of
fast-drying fillers for vehicle bodyshops introduced by
our Sikkens and Lesonal brands.
We also showcased our digital capability, as illustrated
by the Aerofleet Coatings Management system, which
uses drones to help airlines and operators optimize their
maintenance schedules. And we continued to invest to
ensure we remain a paints and coatings industry
sustainability leader. This was highlighted by the
groundbreaking at our Vilafranca site in Spain, where
we’re building a new plant to produce coatings for the
metal packaging industry that are free of intentionally
added bisphenols.
we expect to resume growing volumes while delivering
further margin – and profit – expansion. We don’t
expect our industrial excellence plan to contribute
significantly to this in 2024, as these structural actions
involve a lot of up-front work, but it will boost our
performance beyond 2024.
On behalf of the entire Executive Committee, I want to
thank you, our shareholders, customers, partners and
other stakeholders for your support throughout 2023. In
particular, I want to thank the company’s teams around
the world for all their efforts. Our people continued to
demonstrate their passion and commitment and I’m
proud to work with them hand-in-hand as we take
AkzoNobel to the next level.
2023 was a year in which companies who don’t invest
in their people suffered, as job markets around the
world tightened, creating a real battle for talent. At
AkzoNobel, we continued our efforts to be an employer
of choice through the launch of our new employee
engagement platform, Voices. Upon its introduction,
Voices achieved a global participation rate of 89% and a
level of engagement that far surpassed the industry
norms. We’re processing the flow of insights we gained
to help us identify areas for improvement and empower
employees and managers to create an even better work
environment where everyone can thrive.
Looking ahead to 2024, we’ll still be living in an
inflationary world with some macro-economic
uncertainty. However, we have good momentum and
AkzoNobel Report 2023
During a visit to the US in 2023, our CEO met Keddra Doss, a
production operator at our manufacturing plant in Pontiac, Michigan. It
was one of several site visits that were made during the year to meet
colleagues and become more familiar with activities at our locations
around the world.
Strategy | Sustainability | Leadership and governance | Financial information
7
HOW WE CREATED VALUE
We deliver profitable growth by
developing innovative, high-
performance and sustainable products
that create value for our customers,
shareholders, employees and society
in general.
Revenue from third parties
in € millions
Decorative Paints
Performance Coatings
Innovation investment
Research and development expenses in € millions
AkzoNobel Report 2023
Summary of financial outcomes
Revenue development full-year 2023
in € millions/%
Revenue
EBITDA*
Adjusted EBITDA*
Operating income
Identified items*
Increase
Decrease
2022
2023
10,846
10,668
1,076
1,386
1,157
1,429
708
1,029
(81)
(45)
∆%
(2%)
29%
24%
45%
Adjusted operating income*
789
1,074
36%
OPI margin (%)*
ROS (%)*
6.5
7.3
9.6
10.1
Average invested capital*
8,062
8,233
2%
ROI (%)*
Capital expenditures
Net debt
9.8
13.0
292
286
4,089
3,785
Leverage ratio (net debt/EBITDA)*
3.8
2.7
Number of employees
35,200
35,200
Net cash from operating activities
263
1,126
Free cash flow*
Net income attributable to
shareholders
(29)
840
352
442
Weighted average number of shares (in
millions)
174.7
170.6
Earnings per share from total
operations (in €)
Adjusted earnings per share from
continuing operations (in €)*
2.01
2.59
2.45
3.07
* Alternative Performance Measures: Please refer to reconciliation to the most
directly comparable IFRS measures in Note 3 of the Consolidated financial
statements.
Revenue by destination in %
Based on full-year 2023.
Capital expenditures 2023:
Total €286 million
Capital expenditures are guided to be
€350 million for 2024.
A North Asia
B South Asia Pacific
C EMEA
D North America
E Latin America
16%
12%
47%
13%
12%
A Decorative Paints
B Performance
Coatings
C Corporate and
other
99
165
22
3,9794,3444,3005,6036,4996,368202120222023230258270202120222023—%4%2%-1%5%-7%-2%VolumePrice/mixAcq./div.OtherTotalin CCExch.ratesTotal-10-50510ABCDEABC
Strategy | Sustainability | Leadership and governance | Financial information
8
HOW WE CREATED VALUE
Financial overview
Financing income and expenses
ENVIRONMENTAL
Revenue was 5% higher in constant currencies (reported
revenue -2%). Revenue growth in constant currencies was
mainly due to pricing, with volumes flat for the year.
Acquisitions added 2%, primarily related to Grupo Orbis.
Other, which mainly relates to hyperinflation accounting,
reduced revenue by 1%.
Operating income increased 45% to €1,029 million (2022:
€708 million), with a rebound in gross margins more than
offsetting operating cost inflation. Currency effects from
translation were negative €77 million, mainly driven by the
Argentinian peso and Turkish lira.
Operating income includes identified items of negative €45
million (2022: negative €81 million), mainly related to
restructuring and acquisition-related costs, partially offset
by gains on property divestments.
Adjusted operating income increased 36% to €1,074
million (2022: €789 million). ROS improved to 10.1%
(2022: 7.3%).
Financing income and expenses amounted to negative
€272 million (2022: negative €124 million). The €148
million increase in net expenses largely results from an
increase of net interest on net debt of €36 million, €36
million negative result on hedging contracts – related to
the previously anticipated acquisition of Kansai Paints
Africa, for which cash flow hedge accounting was applied
before – and an increase of €49 million due to the
combined impact of exchange rate differences and
hyperinflation accounting.
Income tax
The effective tax rate was 37.8% (2022: 35.5%). The high
effective tax rate in 2023 is mainly the result of the items
below, which together increased the tax rate by 8.7%:
•
The derecognition of deferred tax assets due to the re-
assessment of technical tax limitations to deduct
interest (increase of the effective tax rate by 5.5%)
• Hyperinflation accounting (increased the effective tax
For business results, refer to Strategy and operations.
rate by 3.2%)
Sustainability progress
Shareholders' equity
Shareholders' equity amounted to €4.3 billion at
December 31, 2023, compared with €4.3 billion at year-
end 2022. Main movements relate to profit for the period
of €442 million, dividend of €338 million and actuarial
losses of €111 million (net of taxes).
We’re focused on ensuring that the pioneering paints and
coatings we supply today can help safeguard our world far
beyond tomorrow. We innovate with and for customers
and play a progressive and collaborative role in energizing
entire industries to advance towards a more sustainable
future.
During 2023, we made further progress towards our 2030
key sustainability ambitions. This progress is highlighted in
charts throughout this section and further detailed in the
Sustainability statements.
AkzoNobel Report 2023
38%
2023
Carbon emission reduction
Own operations (baseline 2018, absolute)
9%
2023
50 %
2030 ambition
50 %
2030 ambition
Carbon emission reduction value chain
Scope 3 emissions, selected Scope 3 upstream and
downstream (baseline 2018, absolute)
62%
2023
Renewable electricity
Of total electricity used in own operations
7%
2023
100 %
2030 ambition
30 %
2030 ambition
Energy reduction
Baseline 2018 (of total energy used in own operations,
relative)
55%
2023
100 %
2030 ambition
Circular use of materials
The amount of materials (in own operations) reused by
AkzoNobel and third parties
Strategy | Sustainability | Leadership and governance | Financial information
9
HOW WE CREATED VALUE
SOCIAL
70,000
2020-2023
25%
2023
Female executives
Dividend in €
Outstanding share capital
Dividend
100,000+
2030 ambition
The outstanding share capital was 170.6 million common
shares at the end of December 2023. The weighted
average number of shares for 2023 was 170.6 million
shares.
People empowered
Members of local communities empowered with new
skills (cumulative)
902
2020-2023
2,000+
2030 ambition
The weighted average number of shares excludes shares
bought back in 2022, for as long as they were not
cancelled, which was realized by the end of the first
quarter. The weighted average number of shares is the
basis for the calculation of earnings per share.
Community projects (cumulative)
Cash flow and net debt
The dividend policy remains unchanged and is to pay a
stable to rising dividend. The final 2022 dividend of €1.54
per common share was approved at the AGM on April 21,
2023, which resulted in a total 2022 dividend of €1.98 per
share (2021: €1.98).
In 2023, an interim dividend of €0.44 was paid (2022:
€0.44). A final 2023 dividend of €1.54 (2022: €1.54) per
common share is proposed.
Invested capital
30 %
2025 ambition
Net cash from operating activities was an inflow of €1,126
million (2022: inflow of €263 million). The increased cash
flow was mainly driven by a decrease in working capital
and increased operating income.
Invested capital at year-end totaled €7.8 billion, down €0.3
billion from year-end 2022. This decrease was mainly
caused by lower inventories, due to the combined impact
of lower raw material prices, currency impact and lower
volumes.
Net cash from investing activities was an outflow of €144
million (2022: outflow of €1,095 million); the 2022 outflow
included an increase in short-term investments and the
payment for the acquisition of Grupo Orbis.
Net cash from financing activities was an outflow of €827
million (2022: inflow of €309 million). The increase in
outflow is mainly related to a higher outflow from changes
from borrowings. In addition, 2022 included the impact
from the share buyback.
At December 31, 2023, net debt was €3,785 million
versus €4,089 million at year-end 2022, mainly due to net
cash generated from operating activities (€1,126 million),
offset by dividends paid (€368 million) and capital
expenditures (€286 million). The net debt/EBITDA leverage
ratio at December 31, 2023, was 2.7 (December 31,
2022: 3.8).
Operating working capital
Operating working capital (trade) was €1.5 billion at
December 31, 2023 (December 31, 2022: €1.8 billion).
Operating working capital (trade) as a percentage of
revenue was 15.1% at year-end 2023, compared with
16.9% at year-end 2022, mainly due to lower inventories.
Pensions
The net balance sheet position (according to IAS19) of the
pension plans at year-end 2023 was a surplus of €0.7
billion (year-end 2022: surplus of €0.7 billion). The
development during 2023 was mainly the result of the net
effect of lower discount rates in key countries, offset by
demographic assumption gains in the UK.
2021
1.98
2022
1.98
1 Proposed
Earnings per share from total operations in €
2021
4.48
2022
2.01
20231
1.98
2023
2.59
Adjusted earnings per share from continuing
operations* in €
2021
4.07
2022
2.45
2023
3.07
* Alternative Performance Measures: Please refer to reconciliation to the most directly
comparable IFRS measures in Note 3 of the Consolidated financial statements.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
10
HOW WE CREATED VALUE
return on investment between 16% and 19%, underpinned
by organic growth and industrial excellence.
The company aims to lower its leverage to around 2.3
times net debt/EBITDA by the end of 2024 and around 2
times in the mid-term, while remaining committed to
retaining a strong investment grade credit rating.
As part of the ongoing integration of Grupo Orbis, the local Pintuco and Protecto brands in Central America have now
adopted our “Flourish” identity. The launch celebrated the long and proud heritage of both decorative paints brands,
while also looking ahead to new opportunities.
Employees
At December 31, 2023, the number of employees was
35,200 (December 31, 2022: 35,200).
Impact from hyperinflation accounting
(Türkiye and Argentina)
As from our Q2 2022 reporting, we have retrospectively
applied IAS 29 hyperinflation accounting for Türkiye from
January 1, 2022. For Argentina, hyperinflation accounting
has been applied since January 1, 2018. In addition, and
in line with IAS 21, foreign currency rates at the end of the
reporting period are used to translate both the balance
sheet and the statement of income into euros.
The impact from hyperinflation accounting and the use of
end of period rates (together referred to as “the impact
from hyperinflation accounting”) is included in normal
results; no identified item treatment is applied.
The net impact from hyperinflation accounting for the full-
year 2023 was negative €64 million on revenues (2022:
positive €5 million), negative €55 million on operating
income (2022: €46 million negative) and negative €65
million on net income (2022: €63 million negative).
2024 Outlook1
Based on current market conditions and constant
currencies, AkzoNobel targets to deliver between €1.5 and
€1.65 billion adjusted EBITDA in 2024.
For the mid-term, AkzoNobel aims to expand profitability
to deliver an adjusted EBITDA margin of above 16% and a
1 Outlook is based on organic volumes and constant currencies, and assumes no significant market disruptions.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
11
STRATEGY AND OPERATIONS
An overview of our strategy, approach to
innovation and the performance of our Paints and
Coatings businesses during the year.
Strategy
Decorative Paints
Performance Coatings
Innovation
12
13
15
17
For more details on key 2023 figures, see the
previous How we created value pages and the
segment information in Note 3 of the
Consolidated financial statements.
During the year, we completed the acquisition of
the Huarun business in China. The deal will
further boost our position in decorative paints in
the region, allow us further market segmentation
and reinforce our position outside of the
premium segment.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
12
STRATEGY
At AkzoNobel, we operate a global portfolio of Paints and
Coatings businesses. Our strategic approach is therefore
focused on the specific requirements of different markets
and customers, which results in distinct and effective
strategies to outperform in the areas where we’re active.
We’ll continue to develop sustainable products that
differentiate us from competitors, allowing us to gain
market share and command higher margins. We’ll also
focus on accelerating our development efforts and
reducing time to market.
We’ve established three overarching strategic pillars
across our portfolio of businesses:
•
Sustainability-driven innovation
• Growth in focus segments and markets
•
Industrial excellence
These pillars will provide the foundation for our sustainable
long-term value creation moving forward and are
described in more detail below.
Sustainability-driven innovation
We’re committed to capturing the opportunities that
sustainability presents as a catalyst for innovation. We
recognize that sustainability is driving changes in our
industry and believe this aligns with our strengths in
innovation and our leadership position in sustainability.
Growth in focus segments and markets
Our growth strategy focuses on continued investment in
growth markets and where we have differentiated
positions, such as in powder, marine and protective and
emerging decorative paints end markets.
As well as complementing our leading positions in
premium, we also understand the importance of solid
positions in our mid-market segments. This enables us to
drive growth, increase scale, achieve higher absolute profit
and protect the profitability of our premium offerings. Our
approach is tailored to the uniqueness of each segment
and focuses on existing AkzoNobel brands, while
improving asset utilization of our integrated supply chain.
Industrial excellence
We know there’s significant value to be gained through
improving our operations. We have bottlenecks in
business-critical supply chains, under-investment in key
sites and low capacity utilization. To help address this
challenge, we’ve launched an industrial excellence
program and expect to see the full benefits by 2027. It's
focused on reducing complexity, enhancing productivity
and optimizing our network through the investment and
modernization of our anchor sites. It aims to deliver cost
reduction, enhanced efficiency, improved service levels
and heightened overall competitiveness.
We also aim to create a seamless experience for both our
customers and employees. To achieve this, we’ll align the
commercial and industrial sides of our business, simplify
our operating model and decision-making processes, and
foster a culture of end-to-end accountability and efficient
execution.
Mid-term ambitions
ADJUSTED EBITDA MARGIN*
>16%
RETURN ON INVESTMENT (ROI)*
16-19%
Adjusted EBITDA* growth
CAGR: >6%
Industrial efficiency benefit
€250 mln by 2027
Industrial excellence program
Volume growth
Leverage
CAGR: + Low single digit %
~2x, strong investment grade
Outlook is based on organic volumes and constant currencies, assumes no significant market disruptions. CAGR on 2023 baseline.
*Alternative Performance Measures: Please refer to reconciliation to the most directly comparable IFRS measures in Note 3 of the Consolidated financial statements.
Annual savings vs baseline
Above and beyond recurring continuous improvement
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
13
DECORATIVE PAINTS
2023 OVERVIEW
Our much-improved results reflected a
stabilization in volumes following the
turbulent macro-economic climate.
Despite some demand headwinds,
overall performance was better than
we’d anticipated entering the year – a
testament to the strength of our brands
and market positioning. Across our
three geographical regions, volumes in
Asia began to rebound as painting
activity in China increasingly benefited
from the shift towards renovation – and
away from new-build – changing the
market mix to our advantage.
Decorative Paints revenue in constant currencies was up
6% on 2022, mainly due to pricing initiatives in response to
continued inflation. Volumes were flat on the previous year.
The acquisition of the Huarun business in China,
completed in August 2023, contributed 2%. Unfavorable
exchange rates were a considerable headwind, reducing
revenue by 7%. Including the impact of currency effects,
reported revenue was 1% lower.
Adjusted operating income of €500 million represented an
increase of 27% on the previous year. Return on sales
expanded by 260 basis points to 11.6%. Inflationary-
driven pricing benefited profitability, while the procurement
of lower priced raw materials began to benefit our
Decorative Paints business in the second half of the year.
The rebound in gross margin was partially offset by
inflationary pressure on operating expenses. Operating
income of €500 million was 29% higher than 2022.
AkzoNobel Report 2023
Decorative Paints is comprised of businesses that focus on a full range of interior and
exterior decoration and protection products for both the professional and do-it-yourself
channels. These include paints, lacquers and varnishes, as well as products for surface
preparation. We also offer services such as mixing machines, color concepts and advice,
along with training courses for applicators. AkzoNobel operates its own sales
distribution network in addition to selling through agents and distributors.
Revenue in € millions
Decorative Paints revenue by destination in %
A EMEA
B Latin America
C Asia
56%
18%
26%
20221
2023
∆% ∆% CC2
Decorative Paints EMEA
2,405
2,413
—%
4%
Decorative Paints Latin
America
767
780
Decorative Paints Asia
1,172
1,107
Total
4,344
4,300
2%
(6%)
(1%)
19%
2%
6%
1 Revenues for 2022 have been updated to reflect changes in the financial reporting
structure.
2 Change excluding currency impact.
Key financial figures
in € millions/%
Adjusted EBITDA3,4
Operating income3
Adjusted operating income3,4
OPI margin (%)3,4
ROS (%)3,4
Key brands
∆%
18%
29%
27%
2022
2023
548
388
393
645
500
500
8.9%
11.6%
9.0%
11.6%
Average invested capital4
3,677
3,755
2%
ROI (%)3,4
10.7%
13.3%
3 Operating income and adjusted operating income (and related measures) for 2022
have been updated to reflect changes in the financial reporting structure. More
information is available on our website.
4 Alternative Performance Measures. Please refer to reconciliation to the most directly
comparable IFRS measures in Note 3 of the Consolidated financial statements.
ABC
Strategy | Sustainability | Leadership and governance | Financial information
14
DECORATIVE PAINTS
EMEA: An incremental recovery in consumer confidence
helped market demand for our products stabilize during
2023, despite uncharacteristically wet weather in Western
Europe during the first half. Volumes were slightly lower
versus the previous year, although we expect a
progressive rebound in market demand in Europe toward
2019 levels over the coming years. Overall, channel
inventories in our key markets have normalized.
Latin America: Market challenges, including the impact of
high inflation and exchange rate volatility, persisted into
2023. Demand patterns between quarters were driven by
pricing distortions, while overall volumes were soft. This
was the first year that Grupo Orbis fully contributed to our
results, following completion of the acquisition part-way
through 2022. During the course of the year, the
Decorative Paints brands of Grupo Orbis adopted our
distinctive Flourish identity, with the new brand image
preserving the traditional names of Pintuco and Protecto,
which have been established for more than 70 years.
Asia: We achieved mid-single digit volume growth
following a rebound in our China activities. Demand trends
in China were mixed, with strong sales at the beginning of
the year tapering out as market demand softened. Dulux
continued to expand its geographical presence, and the
acquisition of the Huarun business in China is expected to
provide further access to distribution channels in the
country’s tier three to tier five geographical areas. The
Huarun brand has a long history, is well recognized in
China and will reinforce our position outside of the
premium segment, bringing further market segmentation
to our portfolio. Trends in South East and South Asia were
broadly positive, albeit with differences across countries, in
line with broader macro-economic trends. Demand in India
remained robust, while Vietnam experienced softer market
conditions because of a financing and real-estate market
contraction.
AkzoNobel Report 2023
We launched a new project in EMEA designed to help us double the size of our
eCommerce and digital business over the next three years. Focused on enabling
eFulfilment capability, the project involves sending individual packages direct to the
door of end-consumers. Many of our key retail customers have started operating
these dropship models to enable them to sell a larger range – it’s a way of selling
products online without the need to keep them in stock. This is a key benefit for the
retailer and enables AkzoNobel to sell wider ranges online, driving incremental sales
revenue. The markets launched to date include the UK, France, Spain and Germany.
The Benelux – which currently uses a local system – will be added to the scalable
EMEA solution in 2024.
Our Dulux Professional Weathershield Express
two-coat system for exteriors was specified for
use on all new Housing and Development Board
apartments built in Singapore. The product has
been proven to increase productivity by up to
30% (compared with three-coat systems),
resulting in time savings of up to 20% and
material consumption reductions of up to 15%.
An estimated 50,000 apartments will be created
across 2024 and 2025.
Strategy | Sustainability | Leadership and governance | Financial information
15
PERFORMANCE COATINGS
2023 OVERVIEW
Our Performance Coatings activities
benefited from a gradual recovery in
many segments during 2023, leading to
much improved financial performance.
Volumes were flat on the previous year,
with growth in a number of our lower
volume end markets offset by
continued weakness in some of our
higher volume end markets. Overall,
volumes remained below 2019 levels.
Revenue in constant currencies was up 4% on 2022, with
a strong contribution from pricing discipline. We also
benefited from an improving mix, with a return to growth in
our aerospace, automotive and marine and protective end
markets, while demand in our high-volume Industrial
Coatings businesses remained soft. Unfavorable exchange
rates were a considerable headwind, reducing revenue by
6%. Including the impact of currency effects from
translation, reported revenue was 2% lower.
Powder Coatings started its rebound in the second half of
the year, while Marine and Protective Coatings continued
to benefit from strong customer order books. In Industrial
Coatings, coil and packaging improved after a tough first
half, while wood remained depressed.
Adjusted operating income of €685 million represented an
increase of 38% on 2022. Return on sales expanded by
320 basis points to 10.8%. Profitability was driven by a
combination of the purchase of lower priced raw materials
– which began to generate benefits in Q2 – and pricing.
The rebound in gross margin was partially offset by
inflationary pressure on operating expenses. Operating
income of €698 million was 56% higher than 2022.
AkzoNobel Report 2023
AkzoNobel is one of the world’s leading manufacturers and suppliers of performance
coatings. Our products are engineered to achieve functional properties such as corrosion
control, fouling control, anti-scratch and passive fire protection, while delivering step
changes in sustainability. Our Performance Coatings activities are organized into four
main businesses: Automotive and Specialty; Industrial; Marine and Protective; and
Powder Coatings. Key end markets include general industrials (agricultural and
construction equipment, construction-related steel and metal fabrication, pipes,
appliances and transportation), energy, packaging, infrastructure and shipbuilding and
maintenance.
Performance Coatings revenue by business unit in
%
A Powder Coatings
B Marine and
Protective Coatings
C Automotive and
Specialty Coatings
22%
23%
22%
D Industrial Coatings
33%
Key brands
Revenue in € millions
Powder Coatings
Marine and Protective
Coatings
Automotive and Specialty
Coatings
Industrial Coatings
Total
20221
1,385
2023
1,377
∆% ∆% CC2
(1%)
6%
1,389
1,482
7%
13%
1,407
2,318
6,499
1,422
2,087
6,368
1%
(10%)
(2%)
6%
(3%)
4%
1 Revenues for 2022 have been updated to reflect changes in the financial reporting
structure.
2 Change excluding currency impact.
Key financial figures
in € millions/%
Adjusted EBITDA3,4
Operating income3
Adjusting operating income3,4
OPI margin (%)3,4
ROS (%)3,4
2022
2023
668
448
497
854
698
685
6.9%
11.0%
7.6%
10.8%
∆%
28%
56%
38%
Average invested capital4
3,895
3,725
(4%)
ROI (%)3,4
12.8%
18.4%
3 Operating income and adjusted operating income (and related measures) for 2022
have been updated to reflect changes in the financial reporting structure. More
information is available on our website.
4 Alternative Performance Measures. Please refer to reconciliation to the most directly
comparable IFRS measures in Note 3 of the Consolidated financial statements.
ABCD Strategy | Sustainability | Leadership and governance | Financial information
16
PERFORMANCE COATINGS
Powder Coatings: Having been impacted by industry-
wide challenges during 2022, the first half of the year saw
a continuation of challenging conditions. Architectural end
markets showed signs of a recovery in the second half of
the year. Performance in our automotive end markets and
electric vehicle-related applications were solid. Driven by
its strong sustainability characteristics, liquid-to-powder
conversion continued to gather pace across many end
markets, with our technology leadership in lower
temperature curing positioning us well for future growth.
The December 2022 acquisition of the wheel liquid
coatings business of Lankwitzer Lanckfabrick GmbH also
delivered synergies.
Marine and Protective Coatings: In our Performance
Coatings portfolio, Marine and Protective Coatings
achieved the strongest growth, fueled by a multi-year
recovery in markets driven by sustainability. The
improvement was most prominent within our Protective
Coatings activities. The continued rebound of our Marine
Coatings business was also notable on the back of a
strong brand proposition, technical expertise and a focus
on sustainability. Meanwhile, we re-established our
presence in the new-build marine market in Asia, focusing
on technical ships, where our high-performance Intersleek
systems provide true differentiation. Intersleek is a biocide-
free foul release solution which delivers fuel and emissions
savings for owners and operators and helps to support the
industry’s decarbonization ambitions. In Yacht, volumes
normalized following a number of buoyant years of
customer demand in the recreational boating segment.
Automotive and Specialty Coatings: We achieved
good volume performance in our aerospace and
automotive end markets as customers continued to work
through elevated backlogs. Consumer electronics end
markets, on the other hand, experienced continued
weakness, although volumes sequentially improved
throughout the year. Volume performance in our Vehicle
Refinishes business was mixed between regions, with
North America comparatively stronger than Europe.
Overall, the Vehicle Refinishes business continued its
revenue growth path, driven by pricing efforts and multiple
wins at bodyshop level.
Industrial Coatings: Volumes declined during the year,
with the Wood Coatings business in particular being
impacted by lower activity in residential housing in North
America and Europe. Coil Coatings rebounded in Europe
after energy prices stabilized, while China returned to
growth, driven by market activity and market share gains.
In Packaging Coatings, the impact of destocking was
largely contained to the first half of the year, with
sequentially improving volumes during the full year
indicating a normalization in customer inventories. During
2023, we launched Accelshield 700, our internal coating
for beverage can ends that is free of intentionally added
bisphenols. This product completes our full-can offering
and will help customers meet the surge in demand for
safer and more sustainable coatings, supporting our
leading market position. The new product also integrates
easily into customers’ existing manufacturing processes,
with limited disruption.
The eye-catching Tech Eagle livery on this Embraer E195-E2 jet was brought to life
by MAAS Aviation. They used more than 14 different colors supplied by our
Aerospace Coatings business. It’s the sixth time we’ve worked on animal-themed
livery with Embraer, having previously provided coatings for equally impressive eagle,
tiger, shark, snow leopard and tech shark designs.
We supplied KIA Motors with its first ever bio-based interior coating, which is being
used on its new EV9 electric SUV. Developed by our Automotive and Specialty
Coatings business, it features two kinds of bio-rosin.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
17
INNOVATION
Exploring new, more sustainable ways
to meet our customers’ needs
Our search for better never stops. We’re driven to find
innovative, more sustainable solutions for our customers,
communities and the planet. We innovate to help make the
world better, safer, more sustainable – and more colorful.
From saving energy, absorbing heat and protecting and
beautifying assets, to making ships go faster, lighting
brighter and air cleaner, our world class reputation for
pushing boundaries can be found in every layer of paint.
Transforming our generation
The paints and coatings industry can play an important
role in decarbonizing industries globally. As an innovation
leader, we’re working on a 50% reduction in carbon
emissions by 2030 for the whole value chain (baseline
2018, absolute) – a commitment that’s been validated by
the Science Based Targets initiative (SBTi). In 2023, our
Scope 3 emissions reduced by 9% (baseline 2018).
The size and scale of this challenge requires the
transformation of our generation. What’s required in
particular is a more collaborative approach, based on the
realization that each contributor will need to innovate
changes which will lead to carbon reduction at various
points in the chain. A key enabler of transformation is our
Paint the Future program, the largest collaborative
innovation ecosystem in the industry. It’s a bold initiative to
accelerate, test, launch and scale ideas and sustainable
solutions for the paints and coatings industry.
In addition to our ambitious carbon reduction targets, we
support a circular economy and aim to provide our
customers with competitive, sustainable solutions that are
free from harmful substances. Our areas of innovation
include the use of bio-based materials, water-based paints
and the phasing out of hazardous materials (see
Sustainable solutions in the Sustainability statements).
AkzoNobel Report 2023
•
The EU-funded VIPCOAT program is an open
innovation platform which aims to help engineers
develop coatings. We’re among 12 partners from
seven countries who have joined forces to make
developing and producing corrosion protection
technologies faster, increasingly sustainable and more
economical
• Our latest Paint the Future Collaborative Sustainability
Challenge was launched. It involves partners from
across the vehicle repair value chain developing a
shared approach to tackle carbon reduction
Optimal management of coatings systems can also help to
achieve cost and energy savings, which is why we’re
supporting our customers with digital and sustainable
solutions:
• Our Aerospace Coatings business developed a new
digital system – Aerofleet Coatings Management. It
enables airlines and operators to optimize the paint
maintenance schedules for their entire fleets
• Bodyshops can now take advantage of a new
generation of fillers from our Sikkens and Lesonal
vehicle refinishes brands, which help to significantly
improve productivity while lowering energy costs
Launched an openly accessible online energy savings
calculator for all powder coatings users
•
In this fast-paced era of the paints and coatings industry,
the central challenge is decarbonization. To tackle this,
collaboration is our best ally. We’re joining forces by
combining our expertise and innovative know-how to
create a more sustainable future for the industry.
Innovation in numbers
~3,000 R&D professionals worldwide
€1.25 bln spent on R&D (last five years)
2,800+ patents/patent applications
70 laboratories worldwide
“In this era of rapid change in our industry,
decarbonization is the core challenge.
Collaboration is our strongest ally in
creating a sustainable future.”
Roger Jakeman Chief Technology Officer
During 2023, we continued to deliver on our innovation
priorities. Our collaborative innovation network is
underpinned by a number of initiatives and actions:
•
The Advanced Research Center Chemical Building
Blocks Consortium (ARC CBBC) envisions a greener,
more sustainable chemical industry. We’re proud to
collaborate with industry, academia and government
stakeholders to advance this mission
• We’ve partnered with the Universities of Manchester
and Sheffield in the UK for a project that will
fundamentally examine “how paint works”. Sustainable
Coatings by Rational Design (SusCoRD) will give us a
clear understanding of how the performance of
protective organic coatings arises
Strategy | Sustainability | Leadership and governance | Financial information
18
SUSTAINABILITY STATEMENTS
This section details our sustainability performance.
It explains our ambitions, outlines our approach to
creating shared value and shows our performance
on key environmental and social indicators.
Introduction
GENERAL DISCLOSURES
Basis for preparation
Governance
Strategy
Impact, risk and opportunity management
ENVIRONMENTAL
Climate change
Pollution
Water and marine resources
Circular economy
Sustainable solutions
EU taxonomy
SOCIAL
Own workforce
Value chain workers
Affected communities
GOVERNANCE
Business conduct
Summary table
19
21
21
23
25
25
28
28
33
33
35
36
38
41
41
47
49
51
51
54
For additional information, visit: akzonobel.com
The indicators that fall within the scope of limited
assurance of the external auditor for 2023 are
marked with the following symbol: u. See page
184 for the limited assurance report of the
independent auditor, which includes details on
scoping and outcomes.
AkzoNobel Report 2023
Real-world performance data compiled from
ships applied with our Intersleek 1100SR
product over the past ten years shows the
biocide-free fouling control coating has slashed
ship owners’ fuel bills by $8 billion and reduced
CO2 emissions by 41 million tons.
Strategy | Sustainability | Leadership and governance | Financial information
19
OUR APPROACH TO SUSTAINABILITY
in, taking into account stakeholder preference, such as
investors, suppliers and customers. We prioritize active
participation in those benchmarks that help drive
continuous improvement and rely mostly on publicly
available information. We’re proud that we remained a
frontrunner in the paints and coatings industry throughout
2023, based on the following ESG rating agencies and
benchmarks.
ESG rating
agency
EcoVadis
Key achievements
Our commitment has earned us our highest ever
rating from EcoVadis – 82/100 – placing us in the
top 1% of companies assessed across all industries
around the world
MSCI
Maintained highest possible rating (AAA) for eight
consecutive years
Sustainalytics Maintained ESG top-rated assessment
FTSE4Good
We featured in the FTSE4Good Index Series for the
18th year running. The series measures performance
across environmental, social and governance (ESG)
practices
Key partnerships
Pushing boundaries to ensure
a sustainable future
At AkzoNobel, we’re focused on ensuring that the
pioneering paints and coatings we supply today can help
safeguard our world far beyond tomorrow. We innovate
with and for customers and play a progressive and
collaborative role in energizing entire industries to advance
towards a more sustainable future.
By using the power of paints and coatings – to harness
energy, reflect heat, protect surfaces for longer, purify
indoor air and reduce drag in ships, for example – we can
help our customers cut their energy consumption, increase
efficiency, lower waste and improve safety, while also
being more cost-effective. It’s about pushing boundaries
and finding inventive ways to collectively make a positive
contribution to our ever-changing world.
This will be vital if we’re to realize our science-based target
of halving carbon emissions in our value chain by 2030.
It’s one of several ambitions we have for 2030 (shown
below), which stem from our three main areas of focus –
climate change, circularity, and health and well-being:
less carbon emissions
in our own operations
and across the value
chain (baseline 2018)
circular use of
materials in own
operations driven by
reduce, reuse, recycle
of revenue from
sustainable solutions
members of local
communities
empowered with new
skills
AkzoNobel Report 2023
Our Director of Sustainability, Wijnand Bruinsma, gave presentations in several
countries during the year, when he outlined our approach and how we’re working
across the value chain to achieve our ambitions.
We put particular emphasis and investment into our
sustainable solutions, so our game-changing portfolio of
innovative products and technologies is always expanding.
This is guided by five key drivers: reduced energy and
carbon; less waste; reduce, reuse and renew; health and
well-being; longer lasting.
By looking beyond the surface and radically rethinking
paints and coatings, we can color people’s lives and
protect what matters for generations to come.
ESG ratings and benchmarks
We constantly monitor our progress to ensure we remain
on the right track and work hard to maintain our high
standards with leading rating agencies, such as
Sustainalytics, EcoVadis and MSCI. This independent
acknowledgement recognizes our ambitious targets and
programs and our sustainability leadership in our industry.
We annually review the benchmarks we actively participate
Strategy | Sustainability | Leadership and governance | Financial information
20
SUSTAINABILITY HIGHLIGHTS
May – Supporting the beverage can industry transition
Oct – Dulux Weathershield specified in Singapore
See p105
See p14
See p45
Sep – Safety Day 2023
See p31
See p45
Jan – 100% renewable electricity North America
Sep – Safety Day 2023
Jun – Pioneering powder coating product launched
Oct – Voices platform goes live
Nov – Bio-based coating used by KIA Motors
See p22
See p43
See p16
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
21
GENERAL DISCLOSURES
BASIS FOR PREPARATION
We use our own reporting principles as the basis for 2023
reporting (see: Reporting Principles Sustainability
statements 2023), in line with the previous year. This
Report 2023 has also been prepared to align with the
format and requirements of the upcoming CSRD.
However, it's not yet fully compliant with the CSRD.
The Sustainability statements of Akzo Nobel N.V. are
prepared on a consolidated basis. The scope of the
consolidation is equal to the scope of consolidation for the
Financial statements, with the exception of associates and
recent acquisitions, as explained below.
In general, our aim is to report acquisitions and
(de)mergers or other similar transactions from the date of
transaction. However, as onboarding and training takes
time, there is often a delay between closing of a
transaction and integration into sustainability reporting. For
2023, the data related to the recent acquisition of the
Huarun business in China, as well as the Lankwitzer
business, is not included. The 2023 data includes the
acquisition of Grupo Orbis, except for the KPI of Suppliers
in sustainability program and SpeakUp! data. For the KPI
Sustainable solutions, we extrapolated for the impact of
Grupo Orbis, as well as the acquisition of the Huarun
business in China. For more information, see Sustainable
solutions.
The material impacts, risks and opportunities connected to
our value chain have been assessed as part of our double
materiality assessment (see Impact, risk and opportunity
management). For KPIs added in anticipation of CSRD,
see Changes in preparation or presentation versus prior
periods. A description of the double materiality process is
included in Impact, risk and opportunity management.
The indicators that fall within the scope of limited
assurance of the external auditor for 2023 are marked with
u The Limited assurance report of the independent
AkzoNobel Report 2023
auditor, which includes details on scoping and outcomes,
is available on page 184. In light of our preparation
towards CSRD, we've added several disclosures for 2023
versus the previous year, which are not yet in scope of the
assurance engagement.
Due to our alignment with the upcoming CSRD, we no
longer claim GRI compliance for 2023 and aim to embed
the TCFD framework in our climate change disclosure. For
a detailed description of the reported KPIs, we refer to the
Reporting Principles Sustainability statements 2023.
Preparation of CSRD implementation
As we’re preparing for implementation of the Corporate
Sustainability Reporting Directive (CSRD), this year’s
Sustainability statements have been structured in the
following order:
• General disclosures, including basis of preparation,
•
•
governance, strategy and our approach to double
materiality
Environmental disclosures, including our approach to
climate change, waste and water management and
our sustainable product portfolio
Social disclosures, including those related to the
health and well-being of our own people, such as
diversity and safety, as well as workers in our value
chain
• Governance disclosures
Time horizons
The reporting period that is applicable to the Sustainability
statements is equal to the reporting period for the financial
statements, except for Scope 3 emissions for 2023. This
reported KPI relates to the period from October 1, 2022,
until September 30, 2023.
Sources of estimation and outcome
uncertainty
The preparation of the Sustainability statements requires
management to make judgments, estimates and
assumptions that affect amounts reported. The estimates
and assumptions are based on experience and various
other factors that are believed to be reasonable under the
circumstances. The estimates and underlying assumptions
are reviewed on an ongoing basis. The KPIs Sustainable
solutions and Scope 3 carbon footprint have a higher
degree of judgement and complexity for which changes in
the assumptions and estimates could result in different
results than those recorded in the Sustainability
statements in this Report 2023.
Value chain estimation
For the calculations of our Scope 3 emissions, we make
use of estimations by means of industry averages. The
database used to retrieve the industry averages are the
CEPE (the European Council of the Paint, Printing Ink and
Artist's Colours Industry) and Ecoinvent databases (see
Climate change for more details). Replacing industry
average data to calculate the Scope 3 emissions attributed
to our suppliers with supplier specific carbon footprint data
is a key driver to improve our data quality. For 2023, 5.5%
of our total Scope 3 carbon footprint (which equates to
11.8% of our total upstream emissions) was calculated
using supplier specific data.
Changes in preparation or presentation
versus prior periods
For 2023, there were changes to the preparation and
presentation compared with previous periods, as we
changed the format of the Sustainability statements to
align with the upcoming CSRD requirements. As a result,
the Sustainability statements are aligned with the
Environmental, Social and Governance presentation
requirements of the CSRD. The content is matched to the
CSRD standards to allow for a reporting foundation for
preparation towards 2024 disclosures, as the first
mandatory reporting year. Several metrics have been
added versus the previous year to already disclose
available metrics and targets required under CSRD.
Strategy | Sustainability | Leadership and governance | Financial information
22
GENERAL DISCLOSURES
production figures. These impacts are also restated for
2022
A baseline adjustment was made for the KPI Scope 3
carbon footprint. The inclusion of Grupo Orbis had a
significant impact on our Scope 3 carbon footprint, for
which we adjusted the baseline and the previous year.
In addition to adjusting our Scope 3 carbon footprint
for the Grupo Orbis acquisition, we also developed
new key value chain models for Powder Coatings, as
well as raw material model revisions. The new Powder
Coatings model was developed with an external
consultant and allowed us to future proof our
customer use phase model to also cover our newly
developed low-E product line. The 2018 and 2022
numbers have also been adjusted, since the new
model uses a different approach compared with the
previous model. For our raw material modeling, we've
carefully assessed the assumptions used in our
modeling of the materials we purchase, leading us to
note that for some materials, more accurate matches
could be found within the current models. We were
able to trace these model changes back to 2018,
allowing us to adjust the baseline for all years since.
The model changes were thorough, giving us
confidence that future model changes will not be
material. The total effects of the Grupo Orbis
acquisition, the Powder Coatings model revisions and
the raw material model revisions on our 2018 baseline
and 2022 comparative figures are included in the table
below
Incorporation by reference
Some disclosures are incorporated by reference, for
example for diversity in the Supervisory Board, the
description of business and markets served and ESG in
remuneration. Wherever we incorporate information by
reference (to other parts of the management report), this is
clearly indicated.
Our architectural powder coatings customers can now benefit from an industry-first
product which cures at temperatures as low as 150◦C. Interpon D1036 Low-E can
also cure up to 25% faster than conventional powders, which cure at 180◦C.
Whatever option customers prefer, they can both cut energy consumption by as
much as 20%.
Adjustments Scope 3 carbon emission reporting in million tons CO2(e)
Reported
historically
Grupo Orbis
adjustment
Powder Coatings
model revisions
Raw material
model revisions
Restated in 2023
2022
2018 (baseline)
13.2
14.0
0.5
0.5
-0.3
-0.2
0.1
0.2
13.5
14.5
Several metrics have been materially changed or
eliminated compared with 2022:
• Organizational Health Index (OHI): During 2023, we
•
implemented a new employee engagement tool, called
Voices, which helps us better respond to the demands
of the organization. This means OHI is no longer
measured and reported
• Greenhouse gas emissions Scope 2: Definition and
measurement changed to allow for market and
location based reporting in preparation for CSRD (see
Climate change)
For Sustainable solutions, the 2022 percentage has
been restated from 40% to 39% to change the
reporting period from November 2021 - October 2022
to January 2022 to December 2022
•
Reporting adjustments related to prior
periods
Reporting errors in prior periods, the methodology
changes eligible for restatement and, where applicable,
other changes, are restated in the current reporting period.
Where this is the case, we indicate this through an
explanatory footnote. For 2023, this was the case for the
following KPIs:
•
A notification of a fine imposed by the UK authorities in
December 2022, in response to a process safety
incident in 2020 at our Felling site, came in too late to
include in the annual report for 2022. As a result, the
RA4 number for 2022 is adjusted from 0 to 1
• We found waste reporting irregularities for 2022 at two
of our manufacturing sites because of
misinterpretations of waste stream definitions, leading
to restatements for non-reusable waste (30 to 32
kilotons) and non-reusable waste per ton of
production (9.68 to 10.25 kg/t) and hazardous waste
non-reusable (17 to 18 kilotons) and hazardous waste
non-reusable per ton of production (5.36 to 5.82 kg/t).
The irregularities also impacted the following other
waste KPIs: percentage circular use of materials; total
waste; reusable waste; hazardous waste; non-
hazardous waste; and their relative per ton of
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
23
GENERAL DISCLOSURES
GOVERNANCE
Statement on due diligence
The role of the management and
supervisory bodies
The composition of the management and supervisory
bodies, including their access to expertise and skills with
regard to sustainability matters, is described in the Report
of the Supervisory Board and the Corporate governance
statement. In addition, the oversight of impacts, risks and
opportunities by the management and supervisory bodies
is also included in that section.
The Executive Committee is responsible for incorporating
our sustainability agenda into the company strategy and
monitoring the performance of each business through the
Operational Control Cycle, as described in the Corporate
governance statement. Given our focus on sustainability,
overall ownership of sustainability is with the CEO.
Sustainability is on the agenda for the Supervisory Board
on a quarterly basis. Separately, the Audit Committee is
kept up to date with sustainability reporting developments.
More information, including on the topics discussed, can
be found in the Report of the Supervisory Board and the
Corporate governance statement.
Integration of sustainability-related
performance in incentive schemes
Goals related to ESG aspects are included in the long-
term incentive (LTI) performance targets for the Board of
Management. A detailed breakdown of the targets,
including the 2023 performance, is also included in the
Remuneration report.
AkzoNobel Report 2023
We perform due diligence for sites that we acquire or
divest. The outcomes of our due diligence processes with
regard to sustainability matters inform us of our material
impacts, risks and opportunities. The identification,
prevention, mitigation and reporting of these actual and
potential impacts is embedded in the way we conduct
business.
Included below is a description of the specific due
diligence processes in relation to human rights and
environmental due diligence. For the due diligence process
performed to determine our material impacts, risks and
opportunities, see Impact, risk and opportunity
management.
Human rights due diligence
As part of our core principles, we’re committed to
respecting internationally recognized human rights in all
our operations and throughout our value chain. This
commitment is in line with the United Nations Guiding
Principles on Business and Human Rights (UNGPs) and
the International Labor Organization (ILO) Declaration on
Fundamental Principles and Rights at Work. Embedding a
continuous human rights due diligence process to
determine a company’s salient human rights issues is at
the core of the UNGPs. In 2021, we finalized our second
in-depth global salient human rights issues assessment
(see results in table below). While we respect all human
rights equally, we prioritized certain issues based on
severity and likelihood. This has resulted in the previously
mentioned salient human rights issues for us to focus on
and conduct further due diligence, in line with our
considerations as shared in our Report 2021. Results of
our ongoing due diligence are used to update our global
salient human rights issues assessment every year. Some
of these issues – after those due diligence results – have
also been identified as a material topic under the CSRD’s
double materiality assessment. For other topics, further
due diligence in the future will determine their materiality.
In addition, we operate continuous topic-specific due
diligence processes that help us identify (potential) human
rights impacts, on which we both engage and
communicate. For example, our Health, Safety,
Environment and Security (HSE&S) audits assess the
health and safety conditions at our manufacturing sites.
Another example is our Supplier Sustainability Framework,
which includes assessments, surveys and audits of our
high-risk suppliers, and is designed to identify and assess
sustainability practices, including human rights, in our
supply chain.
Further information on our salient human rights issues, our
related due diligence activities and mitigating and
remediating measures (for example, related to conflict
minerals) can be found in the relevant sections in the
Social disclosures in the Sustainability statements.
Salient human rights assessment
Health and safety
Working conditions
Discrimination and harassment
Negative impact on local communities
Modern slavery
Upstream supply
chain
•
•
•
•
Own operations
•
•
•
•
Logistics
•
•
•
Downstream
(customers, end-users)
•
•
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24
GENERAL DISCLOSURES
An industry-first online energy savings
calculator was launched by our Powder
Coatings business in Europe. The openly
available resource means that for the first time,
all powder coatings users can instantly
calculate the potential energy and carbon
reductions that could be achieved with our
Interpon products and related services.
Environmental due diligence
Environmental due diligence is embedded in our HSE&S
processes. We have environmental due diligence
processes in place for both acquisitions and divestments.
These processes are usually carried out in collaboration
with a third-party specialist in the form of:
• HSE&S due diligence for overarching Health, Safety,
•
Environment and Security-related topics
Phase 1 and 2 environmental site assessments for soil
and groundwater-related topics. This process is
generally carried out against (inter)national standards
in place
Risk management and internal controls
over sustainability reporting
For a general description of our risk and internal control
processes, refer to the Risk management section.
Internal controls related to sustainability reporting are
dependent on the area of reporting, as multiple internal
functions contribute to our sustainability reporting,
depending on the topic. The majority of reported KPIs are
prepared by our HSE&S and HR functions. At
consolidated level, control measures are in place to ensure
accurate and complete reporting on ESG-related metrics
as part of our annual report.
In 2023, we started to prepare a roadmap for the pathway
towards reasonable assurance readiness for our
sustainability KPIs, which includes the development of a
CSRD compliant control framework as from 2024.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
25
GENERAL DISCLOSURES
STRATEGY
Strategy, business model and value
chain
Markets served
AkzoNobel produces paints and coatings, which is
classified under NACE Code C20.3. This is a subset of
C20 – Manufacture of chemicals and chemical products.
AkzoNobel’s operations are grouped into two main
businesses: Paints and Coatings. For a description of our
business model, strategy and key markets served, see
Strategy and operations.
For a breakdown of headcount by geographical area, as
well as revenue by destination, please refer to the Regional
statistics in the Financial summary.
Interaction with strategy and goals related to
product groups
The key elements of our strategy that relate to
sustainability are: moving to 50% of revenue from
sustainable solutions by 2030, and halving carbon
emissions across our value chain by 2030 (baseline 2018).
Both targets relate to how we formulate, market and sell
our products and will impact the way we interact with our
suppliers and customers over the coming years. As the
majority of our emissions take place outside of our own
operations, collaborating with our suppliers and customers
is key to achieving our ambitions. More details can be
found in Climate change and Sustainable solutions.
Interests and views of stakeholders
In line with the Dutch Corporate Governance Code 2022,
we've published a Stakeholder Engagement Policy, which
is available on our website. As detailed in the policy, our
key stakeholders are customers, employees, governments
and policy makers, industry associations and other
partners, investors, suppliers and wider society.
1 Application Requirements (A11 of ESRS 1).
AkzoNobel Report 2023
The views of these stakeholders shape our strategic
decision-making process. As part of our double materiality
assessment, we also consulted with representatives from
these key stakeholder groups on sustainability-related
impacts, risks and opportunities.
Description of the process to identify
and assess material impacts, risks and
opportunities
IMPACT, RISK AND OPPORTUNITY
MANAGEMENT
Material impacts, risks and
opportunities and their interaction with
strategy and business model
We assessed the impacts, risks and opportunities on
environmental, social and governance matters and how
these interact with our strategy and business model. This
assessment is based on internal and external stakeholder
engagement for both impact and financial materiality. It
results in an overview of our material impacts, risks and
opportunities throughout our value chain.
For details on the material risks, impacts and
opportunities, we refer to the separate disclosures as
included in the Environmental, Social and Governance
chapters. Details on the process steps taken in the double
materiality assessment are included in the next paragraph.
A mapping from the material risks, impacts and
opportunities to the associated European Sustainability
Reporting Standards (ESRSs) disclosure requirements will
be included in our Report 2024.
Our risk assessment process to identify and assess
material impacts, risks and opportunities for ESG-related
topics is structured in line with the requirements of CSRD.
In 2023, we performed a baseline of our assessment in
preparation for CSRD. The outcomes serve as a basis for
an updated double materiality assessment which is to be
performed in 2024. Below we provide a description of the
process steps taken to prepare the assessment.
In the first step of the double materiality assessment, we
gathered and analyzed background research on potentially
material topics to AkzoNobel. For this, we reviewed
different sources:
•
ESG raters, including their view on material topics for
our broader sector and our specific sector, as well as
our suppliers and their respective industries
Sustainability reports of peers, as well as value chain
partners, such as suppliers and customers
The outcomes of our salient human rights issues due
diligence process
Previous years’ impact materiality assessments
•
•
•
This input shaped our view on the landscape of potentially
material environmental, social and governance impacts,
risks and opportunities for AkzoNobel.
During the second phase, we organized several
workshops with internal subject matter experts, with the
aim of rating and calibrating the potential and actual
impacts, risks and opportunities (IROs) for all topics
included in the CSRD1.
In the workshops, we rated the IROs on severity (scale,
scope and irremediability) and likelihood. This assessment
was split per value chain area (upstream, own operations
Strategy | Sustainability | Leadership and governance | Financial information
26
GENERAL DISCLOSURES
Because these topics are not considered material as a
result of the initial double materiality assessment for
CSRD, the related disclosures will not necessarily comply
with the related CSRD requirements when implementing
CSRD. The related disclosures will primarily consist of our
policies and procedures in place.
Double materiality assessment outcome 2023
Other relevant topics
and downstream) and financial materiality was also
analyzed per topic, based on the same materiality
thresholds used for our Financial statements.
During the materiality assessment, we requested
participants to address potential entity-specific topics not
included in the topics provided in the CSRD.
In the third phase, we created a shortlist of material topics
based on the outcome of the workshops. We validated the
assessment with internal stakeholders (management
teams of subject matter experts involved) and the CSRD
Steering Committee. The Executive Committee validated
our double materiality assessment during 2023 and the
Audit Committee and Supervisory Board were informed
about the process and outcome.
Subsequently, the shortlist of topics has been validated
with our external stakeholders, both potentially impacted
stakeholders, as well as users of the information.
We will annually review the double materiality assessment
and update our material impacts, risks and opportunities
based on the outcomes of this review. Every three years,
we aim to perform a thorough double materiality
assessment, unless an event triggers an early
reassessment, for example larger acquisitions or
divestments.
The resulting material topics and the reference to the
relevant section in the Sustainability statements are
included in the table on the next page.
In addition to the material topics mentioned above, we’ve
identified a number of topics related to either legal
requirements or other relevant matters. The topics related
to legal requirements mainly consist of reporting
requirements on human rights due diligence and diversity
and inclusion. Other relevant matters are those which we
deem necessary to understand the organizational context
AkzoNobel is operating in, and which we consider to be
elementary for organizations with our size and impact.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
27
GENERAL DISCLOSURES
The table below includes the material impacts, risks and
opportunities, including the link to the related 2022
material topic, as well as a reference to where the related
disclosures are included in the Sustainability statements.
Topic – Risks and
opportunities
Boundary (value
chain part)
Description of the main risk(s)
Description of the main impact(s)
Link to 2022 material topic
Climate change
mitigation and
Energy
Upstream
Inability of suppliers to take remediating actions to reduce
carbon emissions and/or inability to reformulate to lower
carbon feedstocks
Contributes to global warming and
not able to contribute to the Paris
Agreement
Emissions and energy (climate
change mitigation)
Reference to section in
Sustainability statements
Climate change
Own operations
Inability to reduce our carbon footprint through energy
efficiency improvements and renewable energy sources
Climate change
adaptation
Downstream
Own operations
High-emitting customer segments not mitigating their climate
impact
Inadequate adaptation of supply chain and own operations to
natural hazards occurring from climate change
Loss of assets and ceasing of
operations due to natural hazards
occurring
Climate change adaptation
Climate change
Priority substances
Upstream
Risk of spillage, accidental release and/or emissions
Environmental pollution and potential
health impacts
Sustainable Product Portfolio
Assessment
To be included in the section on
Pollution as from 2024
Own operations
The risk of accidental releases and/or discharges is under
evaluation
Downstream
Inappropriate or unsafe handling of our products
Circularity and
Waste
Upstream
Risk of unavailability of critical raw materials
Resource use having a negative
impact on climate and ecosystems
Materials and waste (for own
operations)
Own operations
Inefficient resource use, landfill and loss of potential heat
recovery from incineration
Downstream
Inefficient resource use due to non-recyclable components in
our paints/coatings and related packaging
Resource use having a negative
impact on climate and ecosystems,
potential environmental contamination
Resource use having a negative
impact on climate and ecosystems
Working time
Upstream, own
operations and
downstream
Excessive working hours for own workers and workers in the
value chain
Negative impacts on the health and
livelihoods of workers and the risk of
modern slavery
Diverse, inclusive and healthy
organization
Health and safety
Upstream
Risk of occupational health and safety incidents
Own operations
Risk of occupational health and safety incidents
Downstream
Inappropriate or unsafe handling of our products
Negative impact on the health and
safety of people
Health and safety (in 2022 related
to own operations and
downstream operations only)
Upstream and downstream to be
included as from 2024, Own
operations (waste) included in the
section on Circular economy
To be included as from 2024 in the
section on Own workforce (for own
operations) and Workers in the value
chain (for upstream and downstream
workers)
Own operations included in the
section on Own workforce; Upstream
included in the section on Workers in
the value chain; Downstream to be
included as from 2024
Opportunity:
Product portfolio
assessment
Downstream
Active collaboration with customers to ensure growing
acceptance of sustainable solutions, thereby bringing tangible
sustainability benefits to our customers
Bringing sustainability benefits to our
customers, such as reducing carbon
emissions
Sustainable Product Portfolio
Assessment
Included in the section on Sustainable
Product Portfolio Assessment as part
of the Environmental section
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
28
ENVIRONMENTAL
CLIMATE CHANGE
Carbon emissions reduction Scope 1 and 2
Materiality and governance
Materiality
Our approach to determining material impacts, risks and
opportunities is described in General disclosures. Our
assessment showed both Climate change mitigation, as
well as adaptation, to be assessed as material topics for
AkzoNobel – the former for our full value chain and the
latter for our own operations.
Governance
Our carbon emission reduction ambition has been
approved by our Board of Management and reviewed by
our Supervisory Board. AkzoNobel is not excluded from
the EU Paris-aligned Benchmarks.
Our approach to climate change
mitigation
We’ve established that climate change could affect our
supply chain, our customers and our operations. In 2021,
we announced an ambition to reduce carbon emissions
across our full value chain by 50% by 2030, taking 2018
as our baseline.
Our ambitions are aligned with the Paris Agreement, which
aims to limit climate change and ensure the global
temperature doesn’t rise more than 1.5˚C above pre-
industrial levels. Approved by the Science Based Targets
initiative (SBTi), our ambitions will help to drive our
innovation and collaboration with our value chain partners,
including customers and suppliers.
Our commitment includes our own operations (Scope 1
and 2), as well as Scope 3 upstream and downstream.
Scope 3 covers purchased goods and services (category
AkzoNobel Report 2023
1 in the GHG protocol), application and use of our
products (categories 10 and 11, including VOC emissions),
and end-of-life (category 12). Our Scope 3 ambition covers
around 95% of our total Scope 3 emissions.
Climate change mitigation in own
operations
To achieve our ambition of reducing our carbon footprint in
our own operations by 50% by 2030 (Scope 1 and 2,
baseline 2018), we have a clear decarbonization strategy
(see waterfall chart above). This strategy will be further
developed in 2024.
First key lever Scope 1 and 2 emission reduction:
Energy efficiency
The first key decarbonization lever for our Scope 1 and 2
emissions is reducing the amount of energy we consume.
We’re aiming to reduce our relative energy consumption
by 30% by 2030 (baseline 2018) and plan to do so
through an ambitious 5% year-on-year reduction objective.
We’ve identified several programs to help us achieve this:
• Operational excellence that will apply energy
management to our daily operations and reduce our
energy use in production, warehouses and offices
• Upgrading inefficient assets such as chillers, air
compressors and furnaces to best-in-class and
improve HVAC systems for our buildings and
warehouses
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29
ENVIRONMENTAL
•
Production footprint optimization by relocating
production from less efficient sites to more efficient
sites
Second key lever Scope 1 and 2 emission reduction:
Renewable electricity purchase and production
Our second key lever is maximizing renewable electricity,
with a priority to produce on-site with solar panels and
with renewable purchasing agreements. We also have a
renewable electricity target of 50% for 2025 and 100% for
2030. We purchase Renewable Electricity Certificates or
Guarantees of Origin and actively look for off-site power
purchasing agreements (PPAs) where possible.
Looking ahead to 2050, we’ll start working on new
reduction levers that will help us towards our carbon
neutral targets. For example, by decarbonizing our fuels
through electrification of thermal processes and by using
biofuels in our boilers and furnaces.
Upstream and downstream operations:
Scope 3 emissions
For Scope 3, we’re taking action by increasing our
sustainable product offering, by innovating for the
development of new sustainable solutions and by
engaging with our suppliers and customers around the
world to collectively find solutions towards our target of
halving carbon emissions in our value chain by 2030.
Collaboration with our value chain partners is key to
collectively decarbonize.
The company’s first solar energy plant in Brazil was inaugurated at our Recife plant.
A total of 1,580 panels have been installed, which will supply nearly 30% of the
location’s electricity requirements. It marked another important step towards
achieving our ambition of reducing carbon emissions in our own operations by 50%
by 2030.
During 2023, we continued to integrate sustainability and
innovation into our daily business to work towards our
ambitions.
The carbon footprint in our value chain in % of contribution to overall carbon footprint
11%
46%
1%
28%
14%
AkzoNobel Report 2023
Four key levers for Scope 3 reduction
When it comes to reducing carbon emissions across our
value chain, we’ve identified four key levers that should
help us achieve the 50% reduction. These levers are:
Energy transition; Process efficiency; Reduced solvent
emissions; and Circular solutions. Projects related to our
Scope 3 reduction are grouped under these four key
levers. Although we believe it’s important to set strong
Scope 3 ambitions, we've not yet disclosed detailed plans
for 2030 to 2050. As we focus our efforts towards halving
our emissions by 2030, the plans we've put in place to
support our Scope 3 carbon emission reduction levers
serve as a base for continued decarbonization post-2030.
Energy transition
Under this lever, we group all carbon reduction
opportunities that result from energy transition in the paints
and coatings value chain. Many of our suppliers and
customers are setting targets for decarbonization
themselves, moving to renewable electricity and cleaner
sources of powering their processes. This is increasingly
leading to growing availability of raw materials with a
reduced carbon footprint. Through our projects and
programs on energy transition, we aim to offer our
customers lower carbon footprint solutions.
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30
ENVIRONMENTAL
Process efficiency
This lever focuses on providing our customers with the
most efficient solution in terms of carbon footprint. Many of
our coatings customers use gas to cure our products. By
collaborating on developing coatings that require less
energy to cure, we can offer our customers products that
can help lower their carbon footprint and save energy
costs. In our Automotive and Specialty Coatings business,
demand for ambient and UV curing coatings – which don’t
require gas to cure – is rising. We’re looking to collaborate
with customers and advise them on carbon reduction
strategies for their coating processes, thereby becoming
the partner of choice for carbon conscious customers.
Reduced solvent emissions
Release of solvents from our products is a key part of our
Scope 3 emissions, which means reduction of solvent
emissions represents a key reduction lever. Projects in this
area are focused on reducing the carbon footprint of
customers who apply our products that contain VOCs.
This can be done by switching to water-based products,
flat reduction of solvents in our formulations and by
thinking along with customers to capture and oxidize the
solvents we supply to them, which can be a key area for
the application of renewable solvents.
Circular solutions
This lever focuses on reducing the end-of-life impact of the
fossil-based materials in our products. This can mainly be
achieved by increasing the amount of renewable materials
in our formulations, which can be done through applying
bio-based, biomass balanced and recycled materials,
among others.
We’re actively running carbon reduction projects
throughout the company in these key focus areas, and
have set up a governance structure to ensure they’re
embedded in future plans, such as our R&D pipeline and
supplier engagements.
Supplier engagement
We actively engage with our suppliers to share our
ambitions and encourage these key stakeholders to do the
AkzoNobel Report 2023
same. Key impact areas for suppliers are: increasing
process efficiency; moving to renewable energy; and
reducing the use of fossil materials and fuels. We also see
more intensive collaboration with suppliers on developing
new innovative solutions as a key driver towards reducing
our full value chain carbon footprint. We held in-depth
discussions with more than ten key suppliers on how their
plans can support our ambition and how we can
collaborate to close any gaps. We’re continuing to work
together on joint programs with key suppliers to achieve
further carbon reduction in our full value chain.
Progress year-end 2023: Scope 3
Our 2023 Scope 3 carbon footprint was down 3% from
2022 (from a rounded 13.5 million tons in 2022 to a
rounded 13.1 million tons in 2023). This was driven by
lower purchased volumes and improvements in our
portfolio, such as more water-based solutions, as well as
more specific carbon footprint data from suppliers. As the
development of new solutions, investments in the value
chain and market acceptance takes time, we expect the
majority of the reduction of our Scope 3 carbon footprint
towards the latter part of the decade.
In 2023, Together for Sustainability (TfS) launched the
Product Carbon Footprint (PCF) Guideline to ensure a
consistent measure of carbon emissions along the value
chain in the chemical industry and beyond. We fully
support this new global guidance and encourage our
suppliers to join us in using it as a way of identifying
collaborative opportunities. To support the secure and
trustworthy exchange of PCF data throughout the
chemical supply chain, TfS is piloting a PCF data-sharing
solution (using Siemens’ “Sigreen” software). The PCF
data-sharing solution allows chemical companies to
request PCF information from their suppliers on purchased
materials. We were involved in piloting the solution during
2023. If successful, this solution will be used to collect
PCF information from our suppliers in an efficient way, on
a larger scale.
During the year, we also increased the scope of suppliers
participating in our Supplier Sustainability Balanced
Scorecard (SSBS) program to almost 100 suppliers,
representing 80% of our upstream carbon emissions. We
request product carbon footprint, waste, energy and
greenhouse gas emission information, to monitor progress
versus our suppliers’ sustainability goals. The SSBS
helped us hold constructive meetings and discussions with
our suppliers to better understand their plans and
challenges. The results of these meetings serve as input
for our strategy and decision-making processes. For more
information on how we work with our suppliers, see
Supplier management.
Climate change adaptation
Potential climate change adaptation risks are included in
our risk assessment processes, both in our own
operations and in our value chain. During 2023, we
performed a desktop study with the help of Zurich
Insurance Group, assessing all our manufacturing sites
(~130), as well as a selection of ~50 key supplier locations
with regards to physical climate risks.
To determine criticality, the total insured value was used
for own locations and total spend value for supplier
locations. Our analysis focused on the high and very high
hazard levels across our portfolio, under different climate
scenarios and future time horizons. The climate scenarios
used were SSP2-4.5 (middle road) and SSP5-8.5 (fossil
fuel development) and the time horizons were 2030 (near
term) and 2050 (mid-long term).
Locations were analyzed for multiple natural hazards
related to climate change, some of which have a higher
inherent physical risk to our operations than others. In
scope were: precipitation, thunderstorms, wind, heat,
flood, drought, wildfire, cold waves and hail. A multi-peril
ranking was produced to identify the locations with the
highest exposure to climate change as a whole. The
outcome of this assessment will be used as a basis for
further analysis around climate risk management with
internal and external stakeholders (e.g. for future resilience
planning and climate-related reporting). This detailed
analysis and potential mitigating actions will commence in
2024.
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ENVIRONMENTAL
• Upstream: Category 1 (purchased goods and
services, including packaging)
• Downstream: Category 10 and 11 (application and
use of sold products), VOC emissions and Category
12 (end-of-life)
Energy consumption reduction and
solar energy
For 2023, our absolute energy consumption (own
operations) reduced 4% versus 2018 and our relative
energy consumption reduced by 7% versus 2018.
Compared with 2022, our absolute energy consumption
remained stable (compensating for the Grupo Orbis
acquisition), while our relative energy consumption was
6% down compared with 2022.
Many energy efficiency measures were taken at our sites
in 2023, and we’re now seeing the results of those
initiatives. Another contributing factor for our improved
energy efficiency was increased production volumes at
some of our sites. The relatively mild winter in some
regions may also have influenced our energy use.
The graphs below and on the next page show our regional
energy split and energy use, absolute and relative, in 1,000
TJ.
We’ll concentrate our water consumption reduction efforts
at our water intensive sites in water scarce areas, in line
with our double materiality assessment.
• Risk of increased divergence in the trade-off between
increased demand for recyclability and inherent long-
lasting aspects of our products
Transition risks: Carbon pricing
We have sustainability assessments in place for all material
investment projects. For the last eight years, we’ve
implemented an internal carbon price for these investment
decisions, anticipating the impact of any future carbon
pricing. Annually, we quantify the potential transitional risk
impact of any global carbon taxation by multiplying our
carbon footprint (Scopes 1 and 2) with the internal carbon
price. To analyze different potential scenarios, we calculate
the impact using a carbon price ranging from €50 to €150
(per ton), the latter being the suggested UN price on
carbon. That range results in an impact well below 1% of
2023 revenues. Our suppliers and customers might be
impacted by carbon pricing, which creates both risks and
opportunities. For example, we can mitigate the carbon
cost impact for our customers by offering sustainable
solutions.
Transition risks: Long-term trends
We further analyzed potential transition risks during a long-
term trends workshop held in 2023. As part of these long-
term trends, environmental transition risks were
considered, including, but not limited to, climate change.
The top five transition risks are included below:
•
The lack of availability of (precious) raw (e.g. bio-
based) materials slowing down the use of more
sustainable raw materials and more sustainable
products
Infrastructure limitations (e.g. electricity network
capacity) hindering us from reaching our sustainability
objectives
•
• Changing legislation (sustainability-driven product or
environmental legislation) impacting the company's
ability to achieve strategic objectives and its ability to
move production (different requirements in different
countries/regions)
• Divergence between societal scrutiny and legislation,
leading to shifting customer and investor expectations
AkzoNobel Report 2023
GHG emission reduction targets: Scope
and methodology
We have a target of 50% carbon emission reduction for
Scope 1 and Scope 2 by 2030 (baseline 2018, absolute)
and a target of 50% carbon emission reduction for Scope
3 by 2030 (baseline 2018, absolute). This is validated by
the Science Based Targets initiative and is in line with a
1.5˚C scenario.
Breakdown Scope 1 and 2
Our GHG emissions under Scope 1 are spread over the
fuels we use at our sites, with natural gas being the largest
contributor. The material emissions from Scope 2 are
almost all related to our non-renewable electricity, with
only some sites purchasing steam and hot water from
external suppliers.
2023 Scope 1, 2 Energy and GHG footprint
Fuel equivalent (TJ)
GHG (kTCO2eq/yr)
887.5
90.9
43.7
4.1
1026.2
49.8
6.7
2.7
0.0
59.2
Scope 1
Natural gas
Fuel oil
LPG
Biomass
Total
Scope 2
Electricity
renewable
Electricity non-
renewable
Steam import
Hot water import
Total
Breakdown Scope 3
Our 50% (absolute) reduction ambition for 2030
encompasses the following categories, covering around
95% of our total Scope 3 emissions:
Fuel equivalent (TJ)
GHG (kTCO2eq/yr)
Regional split energy use in %
2,959.2
1,845.7
32.4
54.7
4,892.0
0.0
116.3
1.8
2.3
120.4
A North America
B Latin America
C North Asia
D South Asia Pacific
E EMEA
17
13
18
10
42
ABCDE
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ENVIRONMENTAL
u Energy use in 1,000 TJ
Energy use
u GJ per ton of production
During 2023, we continued to install solar panels at several
sites and purchase renewable electricity with certificates of
origin. The renewable electricity certificates were
purchased in the Americas and Europe and equaled our
electricity consumption during the year; no balance nor
remaining obligation to purchase remained at year-end.
This resulted in a total renewable electricity percentage of
62% at the end of 2023 (2022: 50%), well on track
towards our target of 100% by 2030 and already achieving
our 2025 interim target of 50%. We also transitioned to
100% renewable electricity at all our manufacturing sites in
North America at the start of 2023. Currently, 3% of our
consumed electricity is produced at our sites. Generating
renewable electricity on-site alleviates pressure on the
electricity grid and further reduces our carbon footprint. In
total, 82 of our locations now use 100% renewable
electricity and 31 locations are using solar panels as a
supplementary source of energy. We’ve currently installed
about 30% of our solar on-site potential, and have a
healthy pipeline of projects for the coming years.
AkzoNobel Report 2023
Gross Scopes 1, 2, 3 and total GHG
emissions
GHG removals and projects financed
through carbon credits
Scope 1 and 2 emissions
Our combined Scope 1 and 2 emissions decreased by
38% versus our 2018 baseline (absolute). We've already
achieved our 2025 interim ambition of reducing our carbon
footprint for our own operations by 25% versus our 2018
baseline. Compared with 2022, we reduced carbon
emissions by 13% in 2023 (absolute), mainly through
purchasing renewable electricity for our North America and
Latin America regions, and improved energy efficiency.
The reported carbon emissions includes our acquisition of
sites in Latin America in 2023 (as part of the Grupo Orbis
acquisition). From a relative perspective, our Scope 1 has
reduced 8% since 2018, while our Scope 2 carbon
emissions reduced by 48%.
Direct CO2 (Scope 1) in kilotons
2018
62.9
2019
58.3
2020
57.2
2021
64.5
2022
60.1
2023
59.2
For the reporting year 2023, we aligned our Scope 2
reporting with the CSRD reporting requirements and have
started reporting location versus market-based. The delta
between location and market-based shows our net carbon
emission reduction results for purchased renewable
electricity in Scope 2.
Indirect CO2 (Scope 2) in kilotons
Scope 2 CO2 - Location-based (kilotons)
Scope 2 CO2 - Market-based (kilotons)
A breakdown of Scope 3 emissions, including targets and
performance, is included in the relevant section and the
Summary table.
AkzoNobel does not make use of financed carbon credits
outside our value chain. Currently, we don’t perform or
purchase any offsetting activities for our GHG emissions
and we don’t make use of carbon removals or storage in
our own operations.
Potential financial effects from material
physical and transition risks and
potential climate-related opportunities
The potential effects on the financial statements of climate
change have been assessed. This includes the impact
of physical risks, such as those associated with water
scarcity, flooding and weather events, as well as
transitional risks that can lead to changes in technology,
market dynamics and regulations. A desktop study was
performed relating to these physical climate risks. Also
considered were AkzoNobel's commitments to reduce
carbon emissions, as approved by the Science Based
Targets initiative (SBTi), and related estimates as to
investments and the timing thereof. The resulting impact
on the financial statements, including in the areas of fixed
assets depreciation and recoverability assessments,
was not deemed material to the company's financial
position and results of operations as of and for the year
ended December 31, 2023.
2023
195.3
120.4
Further potential financial effects from material climate-
related risks are currently being assessed and, where
applicable, will be included in our annual report going
forward.
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33
ENVIRONMENTAL
POLLUTION
Materiality
Our approach to determining our material impacts, risks
and opportunities is described in General disclosures. For
our approach to waste and circular use of materials,
please see Circular economy. Our SOx and NOx
emissions have been classified as not material for our
operations. No continuous emitting processes are
operated and emissions that occur are mostly related to
gas consumption emissions. The material topic of priority
substances will be included in this section for 2024.
Pollution of air
The production and use of solvent-based paints and
coatings causes emissions of volatile organic compounds
(VOCs). These emissions are included in our cradle-to-
grave carbon footprint. Compared with 2022, our relative
Water flow in million m3 (total for AkzoNobel)
VOC emissions per ton of product remained stable for our
own operations, and reduced by 45% versus the 2018
baseline.
We’re reducing VOC emissions in a number of distinct
ways. Firstly, we implement abatement technologies such
as thermal oxidizers or activated carbon filters, for example
at our Chilseo site in South Korea. Secondly, we reduce
our footprint by concentrating solvent-based production in
more efficient or automated factories, to reduce VOC
emissions. For example, we transferred 800 tons of
solvent-based paints out of our Montataire site in France,
which now only produces water-based paint. In addition,
we’re actively working on transitioning from solvent-based
to water-based solutions where possible.
1.73
1.03
1.71
1.01
4.26
5.66
* Factory process water other than water that ends
up in the product, and water used for drinking,
sanitation and irrigation
AkzoNobel Report 2023
WATER AND MARINE RESOURCES
Materiality
Our approach to determining our material impacts, risks
and opportunities is described in General disclosures. For
water and marine resources, the material topics identified
are Water consumption and Water withdrawals for our
water intensive sites in water scarce areas. Both material
topics only apply to our own operations.
Water use and consumption in own
operations
We concentrate our water consumption reduction efforts
at our water intensive sites in water scarce areas.
The bulk of our water use is for cooling (74% in 2023).
Water is also used as a raw material in paints and coatings
and for cleaning. We define a water intensive site as one
that consumes more than 15,000m3 per year. This
excludes cooling water and includes water related to
product. Water scarce areas are determined per the
Aqueduct water risk atlas developed by the World
Resources Institute, in line with previous years. Those sites
that are located in water scarce areas and are water
intensive are expected to meet our target of less than 250
liters of relative fresh water consumption per ton of
product. As per our internal, best-in-class benchmark
analysis, a site that consumes less than 250 liters per ton
of product produced is considered to have water reuse
measures in place.
Strategy | Sustainability | Leadership and governance | Financial information
34
ENVIRONMENTAL
Total fresh water use decreased compared with 2022, due
to a relatively high volume decrease at water intensive sites
versus sites with a relatively low water usage.
Our exposure to (future) water scarcity was included as
part of the climate risk assessment performed during 2023
(see Climate change adaptation). For 2024 and beyond,
we’ll align this with the water scarce areas as identified in
the Zurich climate risk assessment, as described in
Climate change adaptation.
Water use in %
A Cooling
B Product
C Other
74
10
16
u Fresh water use in million m3
Total fresh water use
u m3 per ton of production
AkzoNobel Report 2023
Our Dulux Decorator Centre stores in the UK are aiming to triple the overall number of empty cans they recycle by the end of 2025. Having reached
the one million milestone for recycling paint cans in 2022, there’s now even greater ambition to help make the painting and decorating industry more
sustainable. The free of charge recycling scheme, run in partnership with Veolia, makes it easy for tradespeople to dispose of empty Dulux Trade
paint cans – and help reduce the impact on the planet.
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ENVIRONMENTAL
CIRCULAR ECONOMY
Materiality
Our approach to determining our material impacts, risks
and opportunities is described in General disclosures. For
Circular economy, we identified Resource inflows and
outflows (circularity) as a material topic throughout the
value chain, as well as Waste for our own operations.
Policies, actions and resources related
to resource use and circular economy
Own operations
We’re on a journey towards achieving 100% circular use of
materials in our own operations by 2030. To get there,
we’re focused on reducing the amount of waste and
increasing the circular use of materials. In line with our
Material flow in kilotons
* The amount of materials reused by AkzoNobel and third parties
(reusable waste and by-products) divided by the total waste and by-
products, provides the percentage of circular use of materials.
AkzoNobel Report 2023
strategy of reducing, reusing and recycling materials, our
material optimization process focuses on diverting slow-
moving and obsolete materials (SLOBs) from scrapping to
internal reuse and third-party recyclers and outlets. We
drive waste reduction through multi-disciplinary
collaboration between our commercial teams, supply
chain, manufacturing, HSE&S, our innovation teams and
third parties.
Upstream
One of our goals in becoming more circular is to use at
least 50% recycled content in the plastic packaging used
by our Decorative Paints Europe business by 2025.
By collaborating with our packaging suppliers, we’ve been
able to achieve up to 70% recycled content in our key
packs, without increasing the packaging weight or
reducing its performance. In 2022, we updated most
packs in the UK – our largest European market – and have
further worked towards the roll-out in mainland Europe. In
2023, 77% of the plastic packaging contained recycled
content, which means we’re on track to transform the
remainder by our 2025 target.
3,330
12
63
29
34
3
31
Downstream
Moving towards a circular economy means reducing
waste and increasing circularity throughout our value
chain. We’re driven by reduce, reuse and renew, while our
products seek to protect and make surfaces and materials
last longer. In fact, three of the sustainability criteria used
to assess our product portfolio are directly linked to
circularity. See Sustainable solutions to learn more about
our approach to building a sustainable product portfolio.
Key resource outflows
Waste management own operations
We continue to drive improvements in our own operations,
with numerous waste reduction initiatives having been
carried out in 2023. For example, we made further efforts
to improve the efficiency, and increase the number of our
solvent recovery units, which helps to increase the amount
of recovered and reused solvents that would otherwise be
disposed of as waste.
In addition, we further improved the management of
SLOBs. This resulted in an increased amount of SLOBs
sold to our preferred outlet partners, which otherwise
would have been disposed of as waste.
We aim for 100% circular use of materials by 2030 for our
manufacturing sites. In 2023, we achieved circular use of
materials for 55% of our obsolete material and waste
streams (2022: 54%1). The limited increase is explained by
a steeper reduction in our reusable waste in relation to our
non-reusable waste.
Our relative waste (kg per ton of material produced)
reduced by 2% overall, not (yet) meeting our annual
internal goal of 5%.
1 Restated for 2022, refer to Basis of preparation for further details.
Strategy | Sustainability | Leadership and governance | Financial information
36
ENVIRONMENTAL
u Total waste in kilotons1
Total reusable waste
Total non-reusable waste
u Total kg per ton of production
1 Several waste metrics were restated for 2022, refer to Basis of preparation for
further details.
In 2023, despite the significant increase, we also
continued to work on our ambition of zero waste to landfill,
(defined as <1% of total waste), including at our Grupo
Orbis acquired sites. In 2023, our waste to landfill
increased by 157% (absolute) versus 2022 (1,500 tons).
Waste to landfill was 2.3% excluding Grupo Orbis (2022:
2.2%) and 4.4% including Grupo Orbis locations. Overall,
we’ve reduced waste to landfill by 48% (absolute) versus
the 2018 baseline.
AkzoNobel Report 2023
ENTITY SPECIFIC DISCLOSURES
Sustainable solutions
We identified our sustainable product portfolio as a key
opportunity for AkzoNobel.
In 2020, we set an ambition to increase revenue from
sustainable solutions to more than 50% by 2030. We
consider sustainable solutions to be those that bring
tangible sustainability benefits to our customers, and
market demand for them is growing. By identifying the
sustainable solutions in our portfolio, we can engage in a
more collaborative way with our customers – many of
whom have set their own sustainability targets.
By focusing on the sustainability benefits we offer, we
continue to influence the growing acceptance of more
sustainable solutions in our markets. We work closely with
our suppliers and customers to deliver these products and
services, while ensuring economic value at every stage.
We use the Sustainable Product Portfolio Assessment
(SPPA) framework to identify the sustainability value we
bring to our customers. The SPPA framework is based on
the World Business Council for Sustainable Development’s
(WBCSD) Portfolio Sustainability Assessment, which we
co-developed with other chemical companies. It’s now the
leading sustainable portfolio framework tool in the
chemical industry. The SPPA gives a holistic view of the
sustainability characteristics of our product portfolio.
Together with our customer-focused product stewardship
process, it helps us tailor value-selling strategies to specific
customer needs. By taking this harmonized approach to
our portfolio management, we’re able to create a unique
baseline for future portfolio ambitions.
Our products fall into one of three categories: Sustainable
solutions, Performers or Transitioners. A sustainable
solution is a product that brings one or more sustainability
benefits to our customers, as defined by the sustainability
criteria illustrated below, without having an adverse effect
on the other criteria. In 2023, 39% (2022: 39%) of our
revenue came from sustainable solutions. For 2022, the
percentage of revenue that came from sustainable
solutions has been restated to reflect the period from
January 1, 2022, until December 31, 2022, instead of
November 1, 2021, until October 31, 2022, as reported in
our Report 2022. During the year, we launched new
products with clear sustainability benefits and further
reduced the use of certain priority substances, in line with
our strategy.
In 2023, more product management teams were trained
on the use of the SPPA, resulting in an increased
understanding of the methodology and awareness of the
potential sustainability benefits of our product portfolio.
The SPPA for Grupo Orbis hasn't yet been finalized. This is
due to a lack of data availability and incompleteness, as it
takes a significant amount of time to complete the full
portfolio analysis. The coverage of the SPPA remained
stable compared with the previous year (~80% of
revenue), with the remainder, including Grupo Orbis,
extrapolated based on the sustainable solutions’ revenue
percentage of the relevant business unit. The reporting
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37
ENVIRONMENTAL
period for sustainable solutions is from January 1, 2023,
until December 31, 2023.
Our products fall into one of these three categories:
We continued our cross-functional Raw Material
Sustainability Group (RMSG). The RMSG steers and
provides governance to sustainability aspects concerning
raw materials. Several subject matter experts are part of
this group, for example in the area of product
stewardship. Product stewardship is our approach to
ensuring product safety and its sustainability aspects are
considered throughout the value chain – from raw
material extraction, R&D, manufacturing, transport,
marketing and application, through to end-of-life. We
monitor and drive continuous improvement with our
Product Stewardship Continuous Improvement Tool. Our
Priority Substance Program, which we use to identify and
control the use of hazardous substances, is embedded in
our processes to comply with regulations.
The development and implementation of more sustainable
solutions in the built environment was a specific focus in
2022 and 2023. To enhance the capabilities of our
technical and sales teams, we organized company-wide
training on green building certifications and the customer
benefits of our sustainable solutions in realizing more
sustainable buildings.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
EU TAXONOMY DISCLOSURE
38
EU TAXONOMY
The Taxonomy Regulation establishes the framework for
the EU taxonomy by setting out four conditions that an
economic activity must meet in order to qualify as
environmentally sustainable.
A qualifying activity must:
1. Contribute substantially to one or more of six
environmental objectives, being:
– Climate change mitigation
– Climate change adaptation
–
Sustainable use and protection of water and
marine resources
Transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and
ecosystems
–
–
–
2. Do no significant harm to any of the other
environmental objectives
3. Be carried out in compliance with minimum (social)
safeguards
4. Comply with technical screening criteria
The technical screening criteria specify the performance
requirements for any economic activity that determine
under what conditions that activity makes a substantial
contribution to a given environmental objective and does
not significantly harm the other objectives. For the financial
year 2023, all six objectives listed above have been further
detailed out and are applicable for reporting. Companies
are required to report on the proportion of turnover
(revenues), capital expenditures (CapEx) and operating
expenditures (OpEx) that's associated with environmentally
sustainable economic activities, and to what extent these
activities are aligned (i.e. contributing to one or more
environmental objectives).
The key performance indicators relevant under EU
taxonomy are turnover, CapEx and OpEx. For the purpose
of the calculation of eligible activities, the following financial
AkzoNobel Report 2023
information has been derived from AkzoNobel’s
Consolidated financial statements:
•
Turnover under EU taxonomy is equal to consolidated
external revenues as reported in our Consolidated
statement of income, amounting to €10,668 million
• CapEx under EU taxonomy is the sum of additions in
property, plant and equipment, intangible assets and
right-of-use assets from both investments and
acquisitions resulting from business combinations,
amounting to €488 million. CapEx as included in the
Consolidated financial statements under the
Consolidated cash flow statement amounting to €286
million excludes the impact from additions to right-of-
use assets of €109 million, as well as the impact from
acquisitions resulting from business combinations of
€93 million. Additions to right-of-use assets are
included in the movement schedule on right-of-use
assets, as included in Note 12 of the Consolidated
financial statements. The impact from acquisitions is
included in the movement schedules on Intangibles
and Property, plant and equipment, as included in
Note 10 and Note 11 respectively
• OpEx is calculated in accordance with the EU
taxonomy as direct non-capitalized costs incurred for
the day-to-day servicing of assets, consisting of
research and development costs, short-term leases,
maintenance and repair costs and other similar costs,
amounting to €395 million. This definition differs from
OpEx as included in our Consolidated statement of
income
AkzoNobel’s core activity, manufacturing paints and
coatings (NACE Code C20.3), is currently not defined as
an eligible activity for EU taxonomy, and hence no
technical screening criteria have been developed to
measure alignment to the environmental objectives. As a
consequence, eligible activities were limited in 2023 and
mainly related to supporting CapEx on sustainable
solutions for production sites, consisting of investments in
renewable electricity solutions, on-site waste water
treatment systems and remediation of contaminated sites
and areas. For the determination of eligible CapEx and
OpEx, we’ve performed the following activities:
• Reviewed AkzoNobel’s activities and pre-identified
•
•
•
potential eligible activities
Provided trainings to personnel involved in data-
gathering, explaining key characteristics of the EU
taxonomy guidelines and potential eligible activities
Performed a detailed analysis of the individual
taxonomy-eligible economic activities in cooperation
with key Finance and Sustainability personnel
Set up a multi-disciplinary team in charge of
supporting and answering questions from personnel
involved in data-gathering, as well as reviewing the
reported data at a central level
• Consulted with external experts and peers to ensure a
correct and consistent interpretation of the legal
requirements
The outcomes of the EU taxonomy assessment for 2023
in relation to eligibility to the environmental objectives
resulted in no eligible turnover and an insignificant amount
for CapEx (and related OpEx) related to investments in
waste water treatment systems, solar panels and
remediation of contaminated sites and areas. The reported
amount for CapEx related to investments in waste water
treatment systems and solar panels is eligible in relation to
the climate change mitigation objective. The reported
amount for OpEx related to remediation of contaminated
sites and areas is eligible in relation to the pollution
prevention and control objective.
As the "does not significantly harm" and minimum
safeguard requirements are not met for the eligible CapEx
and OpEx – no aligned CapEx or Opex is reported. The
template disclosure tables as per Annex II of the
Environmental Delegated Act are included in the Appendix
of this Report 2023. The non-eligibility of our activities is
determined by the limited scope of the EU taxonomy for
2023. Despite this inherent non-eligibility, we continue to
focus our efforts towards sustainable solutions and we’ve
made progress towards our ambition of 50% carbon
emission reduction by 2030.
Strategy | Sustainability | Leadership and governance | Financial information
39
EU TAXONOMY DISCLOSURE
EU taxonomy CapEx
in € mln
Note in
FS
2022
2023
Additions to property, plant and
equipment from capital
expenditures and acquisitions
Additions to intangible assets
from capital expenditures and
acquisitions
Additions to right-of-use assets
from additions and acquisitions
Total
11
10
12
EU taxonomy OpEx
in € mln
RD&I expenses
Short-term lease costs
Maintenance and repair costs
Total
387
271
568
98
1,053
2022
258
11
102
371
93
124
488
2023
270
14
111
395
AkzoNobel Report 2023
(Pictured above): More than 40 music students and 500
children living in the Bello Oriente neighborhood of Medellin,
Colombia, now have access to improved music and sports
facilities. Thanks to our Pintuco brand’s “Links of life” project,
the area’s music hall and multi-sport outdoor court received
an extensive renovation, making it even more welcoming for
the local community.
(Pictured left): As part of our global partnership, we helped to
renovate the SOS Children's Village in El Jadida, Morocco. It
involved creating vibrant living spaces for families, as well as
providing workshops for young people to support them on
their way to independent adulthood.
Strategy | Sustainability | Leadership and governance | Financial information
40
EU TAXONOMY DISCLOSURE
Eligible Turnover (A)
Description of activity
Taxonomy code
Related Turnover
% of total
Turnover
Substantial
contribution
criteria
Does not
significantly harm
(DNSH) criteria (Y/
N)
Minimum social
safeguards
Taxonomy aligned
Turnover
Taxonomy non-
aligned Turnover
N/A
€nil
—%
N/A
N/A
N/A
N/A
N/A
€10,668 mln
€10,668 mln
100%
100%
Not applicable, no eligible Turnover
identified
Non-eligible Turnover (B)
Taxonomy non-eligible Turnover
Total (A+B)
Eligible CapEx (A)
Description of activity
Taxonomy code
Related CapEx
% of total CapEx
Production of electricity from solar PV
Water collection, treatment and supply
Sub-total (A)
4.1
5.1
Non-eligible CapEx (B)
Taxonomy non-eligible CapEx
Total (A+B)
Eligible OpEx (A)
€1 mln
€1 mln
€2 mln
€486 mln
€488 mln
<1%
<1%
<1%
> 99%
100%
Description of activity
Taxonomy code
Related OpEx
% of total OpEx
Remediation of contaminated sites and
areas
Sub-total (A)
2.4
€11 mln
€11 mln
Non-eligible OpEx (B)
Taxonomy non-eligible OpEx
Total (A+B)
€384 mln
€395 mln
3%
3%
97%
100%
Substantial
contribution
criteria (%)*
Does not
significantly harm
(DNSH) criteria (Y/
N)*
—%
—%
N
N
Minimum social
safeguards (Y/N)*
Taxonomy aligned
CapEx*
Taxonomy non-
aligned CapEx
N
N
€nil
€nil
€nil
€1 mln
€1 mln
€2 mln
Substantial
contribution
criteria
Does not
significantly harm
(DNSH) criteria (Y/
N)*
Minimum social
safeguards
Taxonomy aligned
OpEx*
Taxonomy non-
aligned OpEx
—%
N
N
€nil
€11 mln
€11 mln
* No aligned CapEx or OpEx is reported. As a result, a condensed view of the substantial contribution criteria and DNSH criteria is shown, not separating out the six environmental objectives as included in the template disclosure of Annex II of the Environmental Delegated Act.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
41
SOCIAL
OWN WORKFORCE
Materiality and governance
Our approach to determining material impacts, risks and
opportunities is described in General disclosures. Our
assessment showed two material topics: Working time
and Health and safety. Both topics have been identified as
material for our full value chain, including our own
workforce.
We also provide additional disclosures on topics which are
required by applicable laws or regulations, or whenever the
disclosures serve the information requirement needs of our
stakeholders. These topics are: gender equality and equal
pay; discrimination and harassment (including violence);
diversity; freedom of association and collective bargaining.
For 2023, no material people-related impacts from climate
change transition plans have been identified.
The characteristics of our workforce can be found in the
Summary table at the end of the Sustainability statements.
For the headcount per country with more than 10% of our
workforce, refer to the regional statistics in the Financial
statements.1
Policies related to own workforce
For topical disclosures, a summary of the relevant policy is
included in the dedicated sections.
Human rights
As part of our core values of safety, integrity and
sustainability, we’re committed to respecting internationally
recognized human rights in all our operations. This
commitment is in line with the United Nations Guiding
Principles on Business and Human Rights (UNGPs) and
the International Labor Organization (ILO) Declaration on
Fundamental Principles and Rights at Work. Further
support is provided by our human rights framework, which
includes policies, a governance structure, a focus on
salient issues, due diligence processes to identify and
mitigate risks, a grievance mechanism and reporting on
risks and actions. Read more in our Human rights position
paper.
Working time
As laid down in our Code of Conduct, our working hours
and remuneration comply with laws and are fair and just.
We introduced our own Global Working Hours standard in
Europe, Middle East and Africa, Latin America and North
Asia, and are continuing to roll them out in the remaining
regions. By doing so, we can monitor that we’re working a
safe number of hours everywhere in the world, even if local
laws allow people to work longer. We’ve conducted an
impact analysis in all of our regions and started making
region-specific implementation plans to make sure we
don’t unintentionally cause difficulties for our people and
their livelihoods.
Discrimination and harassment
As laid down in our Code of Conduct, we treat people with
dignity and respect, and we support diversity and
inclusion. We don’t harass or discriminate, whether
through culture, nationality, race, religion, gender,
disability, association, sexual orientation or age.
Processes for engaging with own
workers and workers’ representatives
about impacts and raising concerns
Our approach to materiality, including the engagement on
impacts, risks and opportunities, is described in Impact,
risk and opportunity management.
As described in the Integrity and compliance management
chapter, our SpeakUp! grievance mechanism offers
employees a means to raise allegations regarding
compliance with our Code of Conduct and violations of
applicable laws and regulations. A dedicated investigation
team follows an investigation protocol which adheres to
strict principles of confidentiality, respect for anonymity,
non-retaliation, objectivity and the right to be heard.
For other concerns that might fall outside the scope of our
Code of Conduct, employees can use other formal and
informal channels to raise their concerns. Examples of
formal channels are the option to raise a formal complaint
to works councils, trade unions, occupational health
services or committees, trusted persons and harassment
committees. The availability of these aforementioned
channels can differ, depending on the region or country
the employee works in. Examples of informal channels
include raising concerns to the relevant line manager, HR
or site manager, suggestion boxes at locations, or during
town halls held at locations.
Diversity, equity and inclusion
During 2023, we launched our new Diversity, Equity and
Inclusion (DE&I) strategy. It sets out our vision, principles
and objectives for creating a respectful work environment
where everyone can unleash their full potential.
1 The total amount reported differs from the total for FTEs reported in the Financial statements, due to the unavailability of a granular breakdown of data for two companies. The difference is around 300 FTEs.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
42
SOCIAL
•
The three pillars driving our initiatives are diversity, equity
and inclusion:
• Diversity means we strive for a workplace where our
people are enthusiastic about building and sustaining
diverse teams and are equipped with tools to do so
Equity is about ensuring consistent application,
treatment and support across the organization
through our policies, ways of working and eliminating
the impacts of bias
Inclusion holds the key to unlocking individual
potential. Every member of our team should feel a
strong sense of belonging and a genuine desire to be
their true selves
•
The full DE&I position paper can be found on our website.
We've set targets related to female executives and
employee engagement, both are explained below.
Female executives
Our target is to achieve at least 30% female representation
at the executive level2 by 2025. We’re currently at 25%.
We consider the promotion and mobilization of internal
talent to be fundamental, which is why we’ve thoroughly
assessed the pipeline leading to the executive level. Our
next step is to provide growth opportunities to identified
talents, alongside setting targets for the two levels below
the executive level, for each of the business units and
functions. Gender representation remains at the core of
our diversity efforts and we're rigorously working towards
increasing our representation through offering interesting
and challenging prospects to our talent. During the year,
30% of newly hired executives were women and 27% of
internal promotions to the executive level were women.
We also track female representation in our Supervisory
Board, Board of Management and Executive Committee.
Our plans for reaching our DE&I ambitions are further
described in both the DE&I position paper and the DE&I
Policy for the executive level, Board of Management and
Supervisory Board, which are available on our website.
Further information on the targets applicable to the Board
of Management and the Supervisory Board can be found
in the Corporate governance statement.
u Female executives in %
Ambition
25
DE&I networks
During 2023, we also continued to roll out our DE&I
workshops, delivered by our growing pool of DE&I Agents,
of which we currently have 77 (64 new agents since
December 2022). Close to 500 employees participated in
our DE&I workshop focused on LGBTI+ inclusion.
Our DE&I networks organized internal events to cover
relevant topics and increase awareness, such as events to
address menopause, coming out as LGBTI+, disabilities in
the workplace and intersectionality. Focus groups, coffee
chats and networking sessions were also organized and
successfully deployed.
Diversity and inclusion employee networks
Percentage of women at executive level. Please refer to the Reporting principles for
the full definition.
A group of 15 graduates successfully completed the second Women in Color training
course set up by our Coral brand in Brazil. Established to help women in vulnerable
situations earn a living as professional painters, the initiative – which is supported by
several partners – involves more than 220 hours of training over 15 weeks. Out of the
14 graduates from the first training program, 12 are now employed as professional
painters.
Building an inclusive workplace
We upgraded our Talent Acquisition guidelines, requiring
among other things, a diverse interview panel to address
and help mitigate unconscious bias.
We continue to focus on our manufacturing and supply
chain sites to ensure that our production population
experiences a healthy and inclusive environment. For
example, during 2023, we invested in improving facilities,
such as women’s bathrooms, showers and changing
rooms. Funds have also been allocated to improving or
creating facilities for women during 2024.
2 Executive level includes all employees with an executive position grade at AkzoNobel and its subsidiaries, including the members of the Executive Committee who are not members of the Board of Management. Executive level further includes the members of the boards of
management and supervisory boards of each of Akzo Nobel Nederland B.V., Akzo Nobel Decorative Coatings B.V., Akzo Nobel Car Refinishes B.V. and International Paint (Nederland) B.V. The company’s executives are considered as AkzoNobel’s sub-top, as referred to in
the Dutch Gender Diversity Bill implemented in 2022.
AkzoNobel Report 2023
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Turnover rate
Overall employee turnover in 2023 was 13% (2022: 15%);
voluntary turnover was 7% (2022: 9%). The turnover rate is
declining, which is a general picture in the industry. Our
overall voluntary turnover rate shows the same number as
before the pandemic (below 8%).
Employee engagement
In 2023, we adopted a new employee engagement
platform, called Voices, which allows us to listen more
effectively to our employees, after the previous platform
was phased out. The first new employee engagement
survey was launched in October 2023 and was rolled out
globally.
Voices allows people managers to see their team’s
feedback in real time, easily share specific data with team
members and discuss and identify follow-up actions
together, to help them create a better work environment. It
means people managers can focus on those areas that
matter most to their team, helping to create a shift in our
employee engagement.
The engagement tool empowers employees to speak their
mind, not only by answering the questions, but also by
leaving comments at any stage.
The new insights will influence our HR strategies, showing
us where we have gaps and where we need to focus first.
It requires good analysis and further exploration to identify
relevant and appropriate follow-up actions.
The target for the first Voices survey was a 75%
participation rate – recommended as a solid initial launch
rate. The fact that we reached a participation rate of 89%
was exceptional.
We also measured the overall engagement index (4.0 out
of 5) and eNPS (employee net promoter score), a global
standard for organizations to measure employee
satisfaction. For eNPS, 0-20 is regarded as good, 20-50
very good, while higher than 50 is excellent. The eNPS
benchmark for manufacturing companies is -2. Our results
AkzoNobel Report 2023
are shown in the graph below. The results for DE&I
engagement specifically show a 4.1 out of 5, among the
highest scores company-wide.
Global participation rate Global engagement
index
32,011 Voices
Benchmark
(Manufacturing) 3.8
Employee Net Promoter Score (eNPS)
Benchmark for manufacturing companies
AkzoNobel
-2 11
-100
0
100
Training and skills development
indicators
Talent development
In 2023, we launched our new talent management
framework. We believe in an experience-based talent
management approach. This means that employees’
careers are shaped around accumulated experiences, and
they’re motivated by staying future fit. We believe in a
culture that stimulates and facilitates talent sharing, where
internal opportunities are offered to our employees. This
year, the framework was rolled out across all senior
managers. For 2024, the framework will be extended to all
manager roles in the organization. More insights on our
new talent development approach will be shared in our
Report 2024.
Training hours
We designed our learning and development framework
according to our learning formula of 70:20:10. The most
effective way to learn and develop a new skill or behavior
is to apply and practice on the job and in real life
situations. When applying the formula, 70% relates to
experience and on-the-job learning – such as job
shadowing and stretch projects – 20% relates to exposure
(e.g. through mentoring and masterclasses) and 10% to
formal education. Our total training hours provided relate
to the 10% formal education. This only includes training
hours for registered learning efforts and excludes
compliance-based mandatory trainings. In 2023, we
provided a total of 98,603 training hours to employees,
equipping them with the skills and knowledge necessary to
excel in their roles and contribute to the success of our
organization. We believe that investing in our employees is
crucial to our continued growth and success, and we're
proud to offer comprehensive training and development
opportunities to our teams. The average number of training
hours was 2.5 (for women it was four, and for men two).
Training and skills development was not determined to be
a material topic, following our double materiality
assessment. However, as we consider it good practice to
provide this information, we include this topic.
Performance reviews
The overall percentage of employees who participated in
our regular performance review was 95% (women: 97%;
men: 94%).
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Collective bargaining coverage and
social dialog
Incidents, complaints and severe
human rights impacts
requirements and/or the requirements from our ISO
certified HSE&S management systems.
Policy on freedom of association and collective
bargaining
As laid down in our Code of Conduct, we respect
individual rights to freedom of opinion and association, and
we respect the right to collective bargaining and co-
determination.
During 2023, no severe human rights impacts and
incidents were reported in our own operations. For an
overview of cases registered through our SpeakUp!
mechanism, please see the Integrity and compliance
management chapter.
AkzoNobel’s current percentage of own employees
covered by a collective bargaining agreement (CBA) is
48%.
Health and safety
Gender pay gap and total
compensation
The gender pay gap was not determined to be a material
topic, following our double materiality assessment.
However, from a stakeholder information requirement
perspective, we include this topic.
In 2022, we commissioned an external party specialized in
data-driven analyses to explore the gender pay gap within
AkzoNobel and evaluate our baseline on gender pay
equality. The research found a 0.9% gap in favor of men,
after correcting for background variables. For benchmark
purposes, the gender pay gap in the EU shows an average
pay difference in favor of men of 12.7% for 2021.
During 2023, we worked on the findings to prevent the
gap from growing by, for example, enabling channels for
employees to address salary discrepancies and increasing
pay transparency, including reporting to external
institutions such as local governments. Another, more in-
depth, gender pay gap analysis by an external party will
take place in the coming years to drive more insights. For
further compensation indicators, such as pay ratios,
please refer to the Remuneration report.
AkzoNobel Report 2023
Safety, as one of our core values, is embedded into
everything we do. We care about the safety of our
colleagues and everyone we work with.
Health and safety policy
Through our Health, Safety, Environment and Security
(HSE&S) Policy, we acknowledge our responsibility for
protecting the health and safety of our employees,
contractors, customers and neighbors, while maintaining
the security of our people and assets and protecting the
environment. It’s our vision to achieve zero injuries, waste
and harm through operational excellence. The
environmental aspects are covered in the Environmental
section, while the health and safety elements are covered
in this section.
Management programs in the areas of people safety and
health, process safety and security help us live up to the
highest standards in our activities and at our sites. Our
commitment to running our operations safely is
underpinned by our Life-Saving Rules and Golden
Principle to stop work if conditions or behavior are unsafe.
Processes for engaging with workers
Our workforce at all locations help to establish and
implement annual HSE&S plans through workers’
representative groups, such as works councils and labor
organizations. This ensures that we conform to regulatory
Targets related to health and safety
•
Fatalities (employees, temporary workers, independent
contractors): Zero
Life-changing injuries: Zero
•
• Regulatory actions level 4 (fines above €100,000):
Zero
For benchmarking purposes, we continue to monitor the
following KPI:
•
Total reportable injury rate for employees/temporary
workers/contractors
Learning from high potential events
In addition to learning from actual injuries and incidents,
we put special emphasis and processes in place to learn
from high potential events (HPEs). A high potential event is
an incident with a potential high impact, or a near miss
(not causing loss or damage) that might have, under
different circumstances, resulted in high, major or
catastrophic impact.
People safety and health
In 2023, we continued our life-critical procedures and
HSE&S roadmap program. We identified areas that need
improvement in our own operations and put them on a
roadmap with targeted plans and governance. We also
continued to invest in functional excellence and the
renewal of our HSE&S capability framework.
In 2023, we continued the implementation of our lift truck/
pedestrian segregation program and continued with
Behaviour Based Safety (BBS), focusing on increased
quality through more coached observations and
strengthening the capability in this area.
We launched company-wide monthly Safety Moments for
safety awareness, which are used by people managers in
their team meetings to keep colleagues in all functions and
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levels of our organization involved and aware of everyday
safety hazards and safe behaviors.
u Total reportable injury rate employees including
temporary workers (per 200,000 hours)
We strengthened our Timeout for Gemba principles to
encourage and engage people in daily dialog, to learn and
improve the context in which work happens and validate
that capabilities, systems and processes are in place.
We continued our industrial hygiene and ergonomic
programs and actively managed occupational illness-
related absenteeism. To meet EU compliance
requirements, we launched Diisocyanate training in all
applicable European languages.
During 2023, we included the Grupo Orbis acquisition in
Latin America in our statistics, adding eight manufacturing
locations and 7% to the hours worked. The total
reportable rate (TRR) for employees and temporary
workers increased to 0.31 (2022: 0.24). Although this is
still at industry-leading levels, the main contributors of the
increase were the Grupo Orbis sites, responsible for 19%
of our reportable incidents. We’re continuing to integrate
these sites to AkzoNobel standards.
In total, 63% of our manufacturing sites have been
reportable injury-free for over a year (2022: 66%).
The lost time injury rate (LTIR) for employees and
temporary workers remained stable at 0.14 (2022: 0.13).
The severity of injuries remained low. The most common
causes of injuries were manual handling/lifting, slip/trip/falls
and cuts. The most frequent injuries were cuts/lacerations,
fractures and sprain/strains.
AkzoNobel Report 2023
The total reportable injury rate (TRR) is the number of injuries resulting in a medical
treatment case, restricted work case and lost time case or fatality, per 200,000 hours
worked. In line with OSHA guidelines, temporary workers are reported with
employees, since day-to-day management is carried out by AkzoNobel. For TRR
contractors, please see our Summary table.
u Lost time injury rate employees including temporary
workers (per 200,000 hours)
Safety Day 2023
Our annual Safety Day is the moment for us to celebrate
safety and reflect on how we’re doing. This year’s theme
was “Make safety a habit today”. The theme encouraged
colleagues to reflect on their own behavior and become
safety leaders by embedding good safety habits into their
daily routines – both at work and during private time. This
theme further built on our “Be human, Be safe” program,
which took a human performance principles approach.
Regulatory compliance
During 2023, we received two fines in the category
Regulatory Actions level 4 – fines above €100,000 (2022:
one).
•
In January, we received a £650,000 fine related to the
Newton Ferrers (UK) environmental incident in 2015
In April, our Birmingham site in the UK received a
£600,000 fine as result of a forklift truck incident which
occurred in 2018
As mentioned in Basis for preparation, a notification of
a fine imposed by the UK authorities in December
2022, in response to a process safety incident in 2020
at our Felling site, came in too late to include in the
annual report for 2022. As a result, the RA4 number
for 2022 has been adjusted from 0 to 1
•
•
The lost time injury rate (LTlR) is the number of injuries resulting in a lost time injury
per 200,000 hours worked. Temporary workers are reported together with
employees, since day-to-day management is carried out by AkzoNobel. For lost time
injury rate contractors, please see our Summary table.
One life-changing injury occurred in Jakarta, Indonesia – a
partial finger amputation caused by the internals of a block
valve. There were no further life-changing injuries or
fatalities in 2023.
During 2023, the number of contractor recordable injuries
was 14 (2022: 10).
Process safety
We systematically assess, manage and communicate the
operational risks of injuries or harm that may result from
the work we do.
In 2023, we continued our dedicated Process Safety
Management (PSM) improvement project, designed to
strengthen our processes and achieve leading standards
in process safety.
To ensure our people, sites and environments stay as safe
as possible, we continued the deployment of our Process
Safety Fundamentals for front-line workers, establishing
operational practices that help prevent incidents.
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HSE&S management foundation
Our company-wide HSE&S management system is
globally certified against ISO 14001 and ISO 45001
standards. The management system consists of policies,
procedures, templates and best practices to promote
learning across the organization and covers the activities
of all employees and temporary workers.
HSE&S audits are performed in three-year (for high hazard
sites) to five-year (other sites) cycles. During 2023, we
conducted 33 audits in total. Compliance assurance is a
key HSE&S priority because it ensures our license to
operate and our business continuity in a fast-changing
regulatory environment.
Our company-wide HSE&S compliance assurance
process is proactive and digitally supported by tools from
a leading third-party supplier.
During 2023, we continued the deployment of our Basis of
Safety standards, with a focus on resins, aluminum
bonding and high-speed dispersers. The standards define
company expectations for these higher risk activities.
Various engineering standards have been adopted: for
grounding and bonding; flexible hose management; and
maintenance of solvent storage tanks. Our locations
continue to implement equipment modifications via a risk-
based approach.
In 2023, we included the Grupo Orbis acquisition in Latin
America in our statistics. In total, we recorded 87 losses of
primary containment (LoPCs) in 2023 (2022: 53), of which
19 were contributed by the Grupo Orbis sites, which
continue on an integration path to AkzoNobel standards.
The main causes identified were operational discipline
(60%) and asset integrity (32%). In total, 70% of our
manufacturing locations had zero LoPCs at the end of
2023, demonstrating our vision of zero spills is achievable.
However, 11% of our locations caused 66% of the spills in
2023. We continue to focus on these locations, ensuring
improvement plans to act on the underlying root causes.
Process safety events
LoPC level 1 and 2
LoPC level 1 and 2 (excl. Grupo Orbis)
2022
2023
53
53
87
68
A loss of primary containment is an unplanned release of material product, raw
material or energy to the environment. They’re divided into categories, dependent on
severity, from small, on-site spills up to level 1.
Security
Our security program protects people, information, assets
and critical business processes, both on and off-site.
During 2023, one level 3 (most severe events) incident
occurred (2022: zero), related to theft of raw materials. A
deep-dive analysis was carried out to identify root causes
and the corresponding action plans were put in place.
Theft and vandalism at our stores continued to represent
the highest incident sub-type, which is similar to wider
society.
AkzoNobel Report 2023
Our annual Safety Day was celebrated in
style by colleagues at the Songjiang
Decorative Paints site in China. Various
activities were held based on the theme of
“Make safety a habit today”, including a
town hall meeting, firefighting practice
competition and safe driving contest.
Employees from six departments also
shared their safety habits.
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WORKERS IN OUR VALUE CHAIN
Materiality
Our approach to determining our material impacts, risks
and opportunities is described in General disclosures. For
workers in our value chain, our assessment showed two
material topics: Working time and Health and safety. We
also provide additional disclosures on modern slavery,
which serves an information requirement of our
stakeholders. For 2023, downstream workers are not yet
covered in our disclosures.
Policies related to value chain workers
Human rights
As part of our core values, we’re committed to respecting
internationally recognized human rights in all our
operations and throughout our value chain. This
commitment is in line with the United Nations Guiding
Principles on Business and Human Rights (UNGPs) and
the International Labor Organization (ILO) Declaration on
Fundamental Principles and Rights at Work. Read more in
our Human rights position statement.
Business Partner CoC
Our business partners are expected to follow our
company’s core values of safety, integrity and
sustainability. These are set out in our Business Partner
Code of Conduct (BP CoC). This code sets out the ethical
behavior we expect from anyone we do business with,
including our suppliers, distributors and agents. All new
business partners are expected to apply the principles laid
down in the BP CoC, or apply equivalent principles. These
principles include, among other things, respect for human
rights, people, process and product safety, fair and just
working hours and remuneration, and grievance
mechanisms for their employees and other interested
AkzoNobel Report 2023
parties. Non-compliance with the BP CoC may lead to
measures being taken, including termination of the
business relationship.
Modern slavery statement
We’re aware that multiple risks come with a complex and
long supply chain, including the risk that modern slavery
may exist in these supply chains. Our Modern slavery
statement sets out our commitment to do our utmost to
prevent modern slavery in our business and supply chain.
Conflict minerals and mica minerals
We have separate position statements on conflict and
mica minerals. In these statements, we describe our
commitment to responsible sourcing, as an important part
of AkzoNobel’s supplier sustainability strategy. We do our
best to ensure our suppliers’ products and components
do not contribute to adverse impacts on human rights. We
do that by conducting due diligence together with our
suppliers into the conflict minerals and mica minerals
supply chains, and take appropriate action when
necessary.
Processes for engaging with value
chain workers about impacts
General
We perform third party, on-site sustainability audits on
selected direct raw material suppliers in high-risk areas.
We do this through our membership of Together for
Sustainability (TfS). A full description of how we manage
supplier relationships is included in Supplier management
in the Governance section of these Sustainability
statements. The Labor and human rights section of these
audits include questions on child labor, forced and
compulsory labor, working hours, minimum wages,
freedom of association, discrimination and harassment,
special work contracts and facilities and dormitories. The
third-party auditors (approved by TfS) are requested to
verify document reviews and conduct individual and group
interviews. Candidates for these interviews are randomly
selected by the auditor, without interference from
management. In 2023, we identified two improvement
opportunities on child or forced labor governance at
suppliers in China that we're working on to address. The
first requires the supplier to develop a child labor
remediation plan in case of any sign of child labor. The
second improvement opportunity is focused on ensuring
that the supplier obtains timely signatures on labor
contracts.
For suppliers who deliver raw materials that contain
products as described in Taking action on material
impacts, risks and opportunities – and who fall under our
human rights due diligence program for materials which
have high risks of negative impacts on human rights
occurring in their supply chain – we provided a webinar for
our suppliers to explain AkzoNobel’s efforts in this area
and what we expect from our suppliers. More than 100
individuals attended one of the two webinar sessions
across the globe.
Mica minerals
We’re a founding member of the Responsible Mica
Initiative (RMI), whose mission it is to establish a fair,
responsible and sustainable mica supply chain in India,
that’s free of child labor by 2030. Via this initiative, much
engagement takes place with workers in the supply chain,
for example through the Supply Chain Mapping and
Workplace Standards program and the Community
Empowerment program.
Processes to remediate negative
impacts and channels for value chain
workers to raise concerns
As described in the Integrity and compliance management
chapter, our SpeakUp! grievance mechanism offers
employees and third parties a means to raise allegations
relating to compliance with our BP CoC and violations of
applicable laws and regulations. A dedicated investigation
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team follows an investigation protocol which adheres to
strict principles of confidentially, respect for anonymity,
non-retaliation, objectivity and the right to be heard. Our
partners should provide their employees and other
interested parties with a mechanism to raise concerns
about violation or potential violation of laws and the values
provided in this Code of Conduct. These concerns must
be addressed in a fair and transparent way. Our business
partners protect confidentiality and prohibit retaliation
against those raising the concern.
In addition to the above, and as mentioned in Supplier
management, we perform EcoVadis assessments as part
of our TfS membership on high-risk and high-spend direct
suppliers. In this assessment, we also ask whether these
suppliers have implemented a formal grievance
mechanism which encourages employees and external
stakeholders to report potential violations of the partner’s
external stakeholder human rights policies.
In the Responsible Mica Initiative (as previously
mentioned), a grievance mechanism was also launched
this year with the aim of a fair, timely and objective
resolution of grievances relating to the implementation of
its mission and operations. The form to file a complaint is
available in English, French, Hindi and Malagasy.
government agencies. This resulted in a focus on our
barytes, calcium carbonate, cobalt, copper, fluorspar,
mica minerals, talcum and tin supply chains. In 2023,
based on further investigations, we concluded that we
couldn’t indicate any modern slavery risks in our barytes
supply chain and have therefore removed it from our high-
risk supply chains list. Read more about the results of this
due diligence in the last paragraph of this chapter.
We participated in the TfS program “Jointly addressing
child labor, forced labor and human trafficking” by
requesting suppliers with room for improvement in that
area (as per their EcoVadis scorecard) to utilize the human
rights training courses on the TfS academy.
In addition, through our RMI membership, we delivered
positive impact for workers in the mica value chain in India.
The Community Empowerment program is transforming
communities in the mica region with initiatives that provide
long-term and self-sustainable remedies to the underlying
causes of child labor and poor working conditions.
Launched in 2018, more than 180 villages and 16,000
households are now benefiting from programs, including
better schools and healthcare delivery, access to more
diverse sources of livelihood and receipt of government
services.
Taking action on material impacts, risks
and opportunities
With regard to addressing potential modern slavery in our
supply chain, we’re focusing on both our direct and
indirect suppliers. For our direct suppliers, we identify our
high-risk suppliers in our Sustainability Supplier Framework
and assess and audit them. More details about this
program and our membership of TfS can be found in our
Governance chapter. For our indirect suppliers – where we
have to look further in the supply chain due to certain risks
– we’ve conducted in-depth research into our raw
materials portfolio and prioritized high-risk supply chains,
based on publicly available information by NGOs and
AkzoNobel Report 2023
Targets related to managing material
negative impacts, advancing positive
impacts, and managing material risks
and opportunities
EcoVadis assessments
As mentioned in Supplier management, we perform
EcoVadis assessments as part of our TfS membership on
high-risk and high-spend direct suppliers. In addition to
the total assessment score, we also expect a minimum
score of 50 in the labor and human rights section of these
assessments. Through our Sustainability Supplier
Program, we track how many suppliers meet this
requirement. For 2023, 63% of our suppliers met this
requirement (2022: 52%).
While we saw continuous improvement on this KPI versus
2022, we realize small and medium suppliers in risk
regions have more difficulties reaching these minimum
requirements. All suppliers have access to the TfS and
EcoVadis academy with dedicated courses in multiple
languages. For 2024, we plan to measure the number of
suppliers who completed trainings in these two
academies.
Together for Sustainability (TfS) audits
For TfS on-site audits, we measured completion of
corrective actions on major and critical findings and
achieved an improvement rate of 86%.
Human rights due diligence
As part of our due diligence program regarding materials
with potential human rights impacts, we measure the
percentage of responses received to our surveys. For tin
and cobalt, we also measure the percentage of smelters
that are either listed as active or conformant smelters in
the Responsible Minerals Assurance Process.
In 2023, we sent out 356 surveys on the minerals
mentioned in Taking action on material impacts, risks and
opportunities, to which 80% responded (2022: 85%). The
reason for the slightly lower response rate, compared with
2022, is that we increased new suppliers in the surveys by
about 20%.
Of the 115 suppliers who confirmed using tin and/or cobalt
necessary for the functionality of the product, 79%
disclosed their smelters. In total, 86% of these smelters
were either listed as active or conformant smelters in the
Responsible Minerals Assurance Process.
For mica, there are currently no conformant mica
processors listed on the Responsible Mineral Initiative
platform. However, through our RMI membership, we –
together with many stakeholders and peer companies –
commit to:
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• Having 100% of processors compliant with the RMI
•
•
Global Workplace standard
Establishing a fair and responsible mica supply chain
(including fair living income) in the Indian states of
Jharkhand and Bihar
Eliminating unacceptable working conditions and
eradicating child labor in India’s mica supply chains by
2030
For all other minerals subjected to the survey (calcium
carbonate, copper, fluorspar and talcum), some suppliers
confirmed that these materials are sourced from known
risk countries associated with forced or child labor. We'll
take action on these in 2024, such as asking our suppliers
about the controls they have in place. If no controls exist,
we'll request that these controls be put in place (e.g. by
means of social audits or visits).
AFFECTED COMMUNITIES
Materiality
Our approach to determining our material impacts, risks
and opportunities is described in General disclosures. We
did not identify any material impacts for affected
communities. We did identify the social programs under
the AkzoNobel Cares umbrella as an opportunity, which is
included in this section. In addition, we detail the
processes we have in place to remediate potential
negative impacts and channels available to raise concerns.
Policies related to affected
communities
As set out in our Code of Conduct, we fully understand
our role and responsibilities when it comes to society and
contributing to the communities we operate in. Whenever
AkzoNobel Report 2023
possible, we make a positive difference to the world
around us, engaging with people and organizations to help
bring the AkzoNobel brand to life, while supporting
deserving and sustainable projects and causes, using our
products when appropriate. We encourage all employees
to get involved in community activities, as long as it
doesn’t lead to a conflict of interest.
In our Business Partner Code of Conduct, we state that
our suppliers should care about the communities they
operate in, and listen to their concerns.
Processes for engaging with affected
communities about impacts
As part of our HSE&S processes (for more information,
see the chapter on our Own workforce) we require every
location to have a procedure in place that covers
processes for stakeholder outreach and external
complaints. Communities are included as important
stakeholders of our locations – the aim is to engage, listen
to any concerns and actively support community projects.
Processes to remediate negative
impacts and channels for affected
communities to raise concerns
As described in the Integrity and compliance management
chapter, our SpeakUp! grievance mechanism offers third
parties, including members of an affected community, a
means to raise allegations regarding compliance with our
Code of Conduct and violations of applicable laws and
regulations. A dedicated investigation team follows an
investigation protocol which adheres to strict principles of
confidentiality, respect for anonymity, non-retaliation,
objectivity and the right to be heard.
Members of an affected community can also file a
complaint directly to the site manager of the relevant
location.
Pursuing material opportunities related
to affected communities
AkzoNobel Cares
For many years, our various social programs have been
demonstrating to the world that AkzoNobel cares. People
and communities all around the globe benefit from the
initiatives and programs under our AkzoNobel Cares
umbrella, including “Let’s Colour”, the Pintuco Foundation,
SOS Children’s Villages and the Education Fund. Local
volunteers from AkzoNobel work closely with partners to
transform communities and make a positive impact. As
part of our key sustainability ambitions, the aim is to
empower more than 100,000 community members with
new skills between 2020 and 2030, through more than
2,000 projects.
Our main social programs focus on inspiring, uplifting and
renovating communities through our global “Let’s Colour”
initiative. We also educate, mentor and train future
generations, unlocking possibilities for people who need
them most. In 2023, we staged 311 projects and trained
around 32,000 people in painting, entrepreneurship,
professional skills and soft skills.
Strategy | Sustainability | Leadership and governance | Financial information
50
SOCIAL
“Let’s Colour”
We believe in the power of paint to transform lives by
uplifting communities and making living spaces more fun,
liveable and enjoyable. Our global “Let’s Colour” initiative is
all about adding color to people’s lives. With our passion
for paint, we aim to provide opportunities for people who
want to learn, grow and flourish. During 2023, we donated
more than 212,000 liters of paint to renovate community
living spaces in 37 countries, with 1,892 employees
volunteering their time. A great example was the vibrant
makeover of Suryatmajan in Yogyakarta, Indonesia. The
village became a visual spectacle and gained recognition
as a tourist destination (see image and caption on the
right).
Our Nordsjö brand has been working with ARTSCAPE in Sweden since 2014. This
year, nine walls were transformed as part of the 2023 Street Art Festival in
Vänersborg, including this mural created by street artist Charlie Granberg.
SOS Children’s Villages
In 2023, we continued to be a strategic partner of SOS
Children’s Villages. As a member of the Global YouthCan!
platform, we work together to support young people at
risk on their journey to self-reliance. Through our painter
academies and by offering soft skills training,
entrepreneurship programs, mentoring and traineeships,
we empowered 2,948 young people with new skills in
2023. We also used our paint to refresh living spaces for
children growing up in family-like care. During 2023,
Colombia joined the partnership, bringing the total to 25
countries involved so far.
AkzoNobel Report 2023
Our Dulux brand turned Suryatmajan
Village in Yogyakarta, Indonesia, into a
visual spectacle as part of a “Let’s
Colour” project. Beyond creating
vibrant murals and colorful walls, it also
helped to attract tourists to the area,
symbolizing both economic growth and
community empowerment.
2023, the initiative raised awareness among more than
34,000 women about opportunities in the paint sector,
providing paint application training and empowering
women with the necessary skills to become independent
paint retailers.
The Pintuco Foundation also contributes to AkzoNobel
Cares. The Colombia-based non-profit entity, part of the
Grupo Orbis acquisition, is similar to our existing “Let’s
Colour” program. It transforms lives with color and offers
social sustainability projects that also provide (skills)
training opportunities for people in local communities. The
social projects are developed through alliances with public
and private organizations.
Education Fund
Through our joint Education Fund, established in 1994, we
continued to support Plan International. In 2022, Plan
International started the Saksham Plus project in
collaboration with the AkzoNobel Paint Academy in Delhi,
India. This economic empowerment initiative targets
marginalized young people, particularly women,
addressing the gap between high market demand for
skilled employees and the insufficient number of qualified
individuals. So far, the project has equipped 29 vulnerable
young people with market-driven skills, fostering sustained
employment in the painting sector.
Local AkzoNobel Cares programs
Our societal initiatives in India benefited more than 50,000
people in 2023. Parivartan, our flagship education project,
helped more than 7,000 children gain better access to
education, while vocational skills training empowered
3,500 underprivileged and disadvantaged youth. More
than 25,000 teleconsultations were also provided under
our community healthcare program in villages across the
country. A key highlight was Project Indradhanush, which
aims to improve the livelihoods of women in rural India. In
Strategy | Sustainability | Leadership and governance | Financial information
51
GOVERNANCE
BUSINESS CONDUCT
Corporate culture and business
conduct policies
We’re committed to leading with integrity in our industry.
The Integrity and compliance management chapter sets
out in more detail how we establish, develop and promote
a corporate culture.
Our Code of Conduct
Our core principles define the culture and behaviors that
we’re committed to embedding throughout AkzoNobel.
We have three core principles – safety, integrity and
sustainability. Our Code of Conduct, which is available in
32 languages, defines the way we live our core principles
every day. It covers various topics, including anti-bribery
and anti-corruption, honest business conduct, conflicts of
interest, health and safety and human rights. We carry out
Code of Conduct training for all our employees every other
year (both online and face-to-face, and tailored to white
and blue collar colleagues), as well as specific training on
key risks to targeted audiences. Our completion rate for
the Code of Conduct training for online employees is more
than 90%. The progress on training is reported to our
Executive Committee and Audit Committee on a quarterly
basis. This is also supported by a communication
program, which focuses on having a strong tone at the
top, raising greater awareness and driving improvement.
Culture of integrity
The regional Integrity and Compliance Managers
contribute to further strengthening the culture of integrity.
This includes identifying and addressing local risks and
cooperating with the business and functional teams to
tailor the program to local risks and follow up on internal
audit findings and SpeakUp! cases.
AkzoNobel Report 2023
SpeakUp!
Our SpeakUp! grievance mechanism offers employees and
third parties a means to raise concerns relating to
compliance with our Code of Conduct. Our dedicated
investigation team follows an investigation protocol which
adheres to strict principles of confidentiality, respect for
anonymity, non-retaliation, objectivity and the right to be
heard. Anyone who believes they’ve been retaliated
against for making a good faith concern can also report
such retaliation, which will be investigated as a potential
Code of Conduct violation. As set out in the Integrity and
compliance management chapter, our Integrity and
Compliance SpeakUp! Committee reviews these
investigations and also decides on discipline and control
improvement actions, as well as monitoring and
responding to any trends identified in investigations. The
number of reports and the status are reported quarterly to
the Executive Committee and Audit Committee.
For direct suppliers with an annual spend of €250,000, we
perform an annual risk analysis, reviewing the country and
industry risks our suppliers are exposed to. The threshold
has been set to ensure it also covers small and medium-
sized companies. Any suppliers that are identified as high-
risk through this annual approach are selected for the
Together for Sustainability (TfS) Assessment and Audit
program. In 2023, the total number of suppliers in scope
amounted to 1,347 suppliers, covering 83% of our global
spend and 93% of our upstream carbon emissions. TfS (of
which we’ve been a member since 2013), is a
procurement-driven initiative that improves the
sustainability performance of chemical companies and
their suppliers. The program is based on the UN Global
Compact and Responsible Care® principles. The
sustainability assessments are performed by EcoVadis, a
partner of both TfS and AkzoNobel and covers topics in
the areas of environment, labor and human rights, ethics
and sustainable procurement, based on international
standards.
Management of relationships with
suppliers
u Suppliers in sustainability program bar size indicates
total number of suppliers
We work with our suppliers to create value and
continuously improve our sustainability and theirs. We
have dedicated programs in place to engage with
suppliers on the various subjects.
With regard to social and environmental risks, all direct
suppliers with an annual spend of more than €1,000 are
requested to sign our Business Partner Code of Conduct.
This is a core part of our commercial agreement with our
suppliers and enables us to do business based on our
core values of safety, integrity and sustainability.
Signatories cover 99% (2022: 99%) of the product related
spend and 93% (2022: 93%, excluding logistics) of the
non-product related spend, including logistics. In 2023, we
implemented an IT solution to automate the collection and
filing of the Code of Conduct signatories.
Meet expectations
Under development
Not assessed/Lost validity
24%
19%
52%
63%
27%
57%
202120222023 Strategy | Sustainability | Leadership and governance | Financial information
52
GOVERNANCE
Suppliers in this sustainability program are requested to
achieve a total score of 45 and a labor and human rights
score of 50 through an annual assessment. Suppliers not
yet meeting these thresholds are shown as “under
development” in the graph. Complementary to the
assessment, we perform third-party TfS audits on selected
supplier sites in risk regions. In 2023, a total of 22 TfS site
audits were performed on our suppliers.
Through the EcoVadis and TfS academy, we provide
trainings to our suppliers on sustainability topics. In
addition, we perform annual onboarding webinars, which
were attended by 95 supplier individuals in 2023.
We continued to reduce our supply base quite significantly
during 2023. This helped us manage our sustainability
program through consolidated suppliers with a good
sustainability performance. This contributed to a reduced
number of suppliers in the sustainability program (85 fewer
versus 2022).
Looking at carbon emission mitigation, because 46% of
our carbon emissions come from our upstream activities,
this is an area where we can make a big impact through
collaboration and innovation with our suppliers. More
details can be found under Climate change mitigation.
For indirect suppliers, the TfS program already addresses
sustainable procurement activities at our suppliers (our Tier
2 suppliers). In addition, we have a human rights due
diligence program to address potential impacts on human
rights further up in our value chain. More information can
be found in Workers in our value chain.
AkzoNobel Report 2023
As part of our approach to managing our relationship with
suppliers, we provide various sustainability trainings to our
buyers. These trainings are available via our learning
academy “Success Factors”. We also offer live webinars.
For 2023, our buyers’ training focused on upcoming
legislation requirements, particularly human rights due
diligence. A total of 74 buyers attended these webinars.
For more information about our approach to human rights
in our upstream value chain, see Workers in our value
chain.
In 2023, we successfully launched a pilot program for
Third-Party Risk Management, targeting sales-side high-
risk third parties, screening them on corruption and bribery
risks. With regard to our suppliers, our EcoVadis
assessments also cover corruption and bribery.
Any alleged violation of our anti-corruption or anti-bribery
rules and procedures can be reported through our
SpeakUp! process (as previously described) and is then
investigated by an independent team.
Prevention and detection of corruption
or bribery
Political influence and lobbying
activities
At AkzoNobel, we’re committed to conducting our
business fairly, transparently and with integrity, while
applying the highest ethical and legal standards. We don’t
make, offer or authorize bribes or conduct any other form
of unethical business practice. We believe in competing on
the merits of our products.
Our rules and procedures related to anti-corruption or anti-
bribery can be found on our Policy Portal, which is
accessible to our employees. The regional Integrity and
Compliance Managers provide support for identifying and
addressing local risks, and cooperating with the business
and functional teams to tailor the program to local risks
and follow up on internal audit findings and SpeakUp!
cases.
Mandatory training on anti-corruption/anti-bribery is
delivered digitally to all new online colleagues. Classroom
trainings are also given for specific teams and on specific
risks that result from SpeakUp! cases, audit findings or
general preventive measures. As covered in the Integrity
and compliance management chapter, during 2023, we
launched a new online gifts and hospitality training. To help
our employees act in line with our anti-bribery and anti-
corruption rules and procedures, we launched new and
improved gift and conflict of interest tools (including a pre-
approval workflow).
As a leading paints and coatings company, we participate
in the public debate about various topics within our
industry. Collaborating with stakeholders is fundamental to
what we want to achieve. Our lobbying activities, and
broader stakeholder engagement, are guided by our
company strategy and governance and are based on
material impacts, including our approach to sustainability.
AkzoNobel representatives engage directly and indirectly –
via trade and industry associations, as well as dedicated
sustainability coalitions – with stakeholders globally.
AkzoNobel has a global policy in place around Donations
and Sponsorships Rules and Procedures. It states that we
should not promise, offer, give or authorize anything of
value, directly or through others, with the intent to
improperly influence or reward a business decision. The
policy adds that all employees have a responsibility to
make decisions in the company’s best interest and to
ensure that our dealings with (business) partners are
objective and not influenced by donations or
sponsorships. We do not provide donations and/or
Strategy | Sustainability | Leadership and governance | Financial information
53
GOVERNANCE
sponsorships to organizations owned, controlled by,
associated with, or at the behest of government officials1.
Our main topics are:
• Relationships with (local) governments and
communities where the company has operations. This
includes identifying trends, obligations and
expectations in relation to our license to operate, as
well as sharing views in support of a competitive
company and industry
• Contribute to the green transition, for example by
sharing expertise about value chain carbon footprint
reduction and how our products enable others to
become more sustainable
• Chemicals and environmental regulation, including
sharing our view on risk-based substance
management as relevant for paints and coatings
products and manufacturing
Innovation and R&D, in support of an innovation-
friendly environment
International corporate social responsibility, promoting
sustainable business practices and policies
•
•
For more information, see our position statements:
www.akzonobel.com/en/about-us/position-statements
Akzo Nobel N.V. is registered in the EU Transparency
register: ID number: 365563511941-15. Examples of
collaborations can also be found on our website:
www.akzonobel.com/en/about-us/collaborations-
1 “Government officials” are:
• An officer or employee of any government, department, agency, bureau, authority, or state-owned or state-controlled entity
• Acting in an official capacity for, or on behalf of, any government, department, agency, bureau, authority, or state-owned or state-controlled entity
• An official, employee, or person acting on behalf of a government-sponsored or public international organization, such as the European Union, the United Nations or the World Bank
• Holding a legislative, administrative, executive, or judicial position, whether appointed or elected; a political candidate
• An officer or employee of a political party; a member of a royal family; or a family member of, or otherwise closely associated (whether family or personal), with any of the foregoing
Some examples of government officials are public servants, public officials, administrators, police officers, military, judges, public prosecutors, tax or customs officials, employees in state companies,
local politicians, political parties, political officials or candidates for political office, members of the royal family, mayors and city council members.
AkzoNobel Report 2023
To help bodyshops accelerate
repair performance, our
Sikkens and Lesonal vehicle
refinishes brands launched a
new generation of fast-drying
fillers. Known as Sikkens
Autosurfacer Optima and
Lesonal 2K Ultimate Filler, they
can significantly improve
productivity while lowering
energy costs and consumption
– without compromising on
quality.
Strategy | Sustainability | Leadership and governance | Financial information
54
SUMMARY TABLE
SUSTAINABILITY PERFORMANCE SUMMARY
The indicators that fall within the scope of limited
assurance of the external auditor for 2023 are marked with
the following symbol:Ñ
Our reporting principles are available on
www.akzonobel.com/en/about-us/sustainability-/
reporting-principles
ENVIRONMENTAL
Energy use and emissions
Ñ Total energy use
– per ton of production
Regional split energy use1
North America
Latin America
North Asia
South Asia Pacific
EMEA
Ñ Renewable energy (own operations)
Ñ Renewable electricity (own operations)
Ñ Greenhouse gas emissions – Direct CO2(e)
emissions (Scope 1)
– per ton of production
Ñ Greenhouse gas emissions – Indirect CO2(e)
emissions (Scope 2)
– per ton of production
Ñ Total Greenhouse gas emissions – Scope 1 and
Scope 2 combined CO2(e) emissions – Market-
based2
– per ton of production
Total Greenhouse gas emissions – Scope 1 and
Scope 2 combined CO2(e) emissions – Location-
based1
– per ton of production
Scope 2 Market-based2
Unit
1000TJ
GJ/ton
%
%
%
%
%
%
%
kilotons
kg/ton
kilotons
kg/ton
kilotons
kg/ton
kilotons
kg/ton
kilotons
2019
6.02
1.88
31
37
58.3
18.18
183.1
57.13
241.4
75.31
2020
5.69
1.83
33
40
57.2
18.42
168.2
54.22
225.4
72.64
183.1
168.2
2021
6.33
1.89
37
45
64.5
19.27
172.1
51.41
236.6
70.68
5
*
172.1
2022
5.91
1.90
41
50
60.1
19.35
147.5
47.45
207.6
66.80
147.5
Scope 2 Location-based1
1 Reported as from 2023. For energy use, the 2018 baseline is 1.91GJ/ton. For Scope 1 and 2 combined CO2(e) emissions, the 2018 baseline is 288.9 kilotons.
2 In 2023, we started to centrally manage renewable electricity following the market-based methodology using certificates. For 2019-2022, our sites provided the % Renewable
kilotons
electricity.
3 Baseline 2018.
AkzoNobel Report 2023
2023
5.92
1.78
Ambition 2030
30% less3
17
13
18
10
42
50
62
59.2
17.79
120.4
36.17
179.6
53.95
254.5
76.46
120.4
195.3
100
50% less3
Strategy | Sustainability | Leadership and governance | Financial information
55
SUMMARY TABLE
Scope 1 breakdown1
Natural gas
Fuel oil
LPG
Scope 2 breakdown1
Electricity non-renewable
Steam import
Hot water import
Ñ Volatile organic compounds (VOC)
– per ton of production
NOx emissions
– per ton of production
SOx emissions
– per ton of production
Resource efficiency2
Ñ Total waste
– per ton of production
Ñ Circular use of materials
Ñ Total reusable waste
– per ton of production
Ñ Total non-reusable waste
– per ton of production
Ñ Hazardous waste total
– per ton of production
Non-hazardous waste total
Ñ Hazardous waste non-reusable
– per ton of production
Total Hazardous waste reusable
Ñ Hazardous waste to landfill
– per ton of production
Ñ Non-hazardous waste to landfill
Ñ Total waste to landfill
Unit
kilotons
kilotons
kilotons
kilotons
kilotons
kilotons
kilotons
kg/ton
kilotons
kg/ton
kilotons
kg/ton
kilotons
kg/ton
%
kilotons
kg/ton
kilotons
kg/ton
kilotons
kg/ton
kilotons
kilotons
kg/ton
% of hazardous waste
kilotons
kg/ton
kilotons
kilotons
2019
2020
2021
2022
1.19
0.37
0.07
0.02
0.04
0.01
67
21.00
55
34
10.73
33
10.28
29
9.07
38
14
4.46
52
0.45
0.14
9.40
9.84
0.95
0.31
0.07
0.02
0.03
0.01
62
19.96
57
32
10.39
30
9.57
28
8.93
34
15
4.70
46
0.23
0.07
6.22
6.45
0.96
0.29
0.07
0.02
0.03
0.01
67
19.87
58
35
10.48
31
9.39
31
9.19
36
17
4.95
45
0.11
0.03
1.39
1.50
0.83
0.27
0.07
0.02
0.03
0.01
60
19.26
54
28
9.01
32
10.25
29
9.17
31
18
5.82
38
0.14
0.05
1.12
1.27
2023
49.8
6.7
2.7
116.3
1.8
2.3
0.91
0.27
0.07
0.02
0.03
0.01
63
18.95
55
29
8.79
34
10.16
30
9.09
33
20
5.98
33
0.36
0.11
2.41
2.77
Ambition 2030
100
Zero (<1% of total
waste)
1 Reported as from 2023.
2 Several waste metrics have been restated for 2022, refer to Basis of preparation for further details.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
56
SUMMARY TABLE
Resource efficiency (continued)
Ñ Total freshwater use
– per ton of production
Ñ Total fresh water consumption (excluding water
related to product)
– per ton of production
Supplier management
Unit
million m3
m3/ton
million m3
m3/ton
PR suppliers signed Business Partner CoC
NPR suppliers signed Business Partner CoC
Ñ Suppliers participating in sustainability program
Ñ Suppliers in sustainability program – under
development
Ñ Suppliers in sustainability program – in line with
our expectation
% of spend
% of spend
% against baseline
% against baseline
% against baseline
Survey response rate (materials with potential
human rights impact)
% of surveyed
suppliers
Third-party on-site sustainability audits (including
TfS shared audits, cumulative)
number
Sustainable product portfolio and product safety
Ñ Sustainable solutions1
% of revenue
Value chain emissions2
Ñ Cradle-to-grave carbon footprint
(Scope 1, 2 and 3)
million tons
% of total carbon
footprint
Cradle-to-grave with selected Scope 3 as part of
total cradle-to-grave carbon footprint
Ñ Scope 3 upstream selected categories
Ñ Scope 3 downstream selected categories
million tons
Ñ Scope 3 – upstream and downstream combined million tons
Scope 3, category 1. Purchased goods and
services
million tons
million tons CO2(e)
(estimated)
2019
8.05
2.51
98
84
65
18
47
81
2020
9.12
2.94
98
89
75
24
51
86
263
315
13.6
96
6.2
7.2
13.4
6.2
12.7
96
5.8
6.7
12.5
5.8
2021
9.56
2.86
1.27
0.38
99
89
84
27
57
85
313
39
14.6
97
6.8
7.6
14.4
6.8
Scope 3, category 10. Processing of sold products million tons CO2(e)
(estimated)
(included in use)
(included in use)
(included in use)
2022
8.63
2.78
1.14
0.37
99
93
77
24
52
85
298
39
13.7
95
6.4
7.1
13.5
6.4
5.3
Ambition 2030
>50
50% less3
2023
7.70
2.31
1.24
0.37
99
93
82
19
63
80
305
39
13.3
95
6.1
7.0
13.1
6.1
5.2
Scope 3, category 11. Use of sold products
million tons CO2(e)
(estimated)
Scope 3, category 12. End-of-life treatment of sold
products
million tons CO2(e)
(estimated)
5.5
1.7
5.0
1.7
5.7
1.9
(included in
processing)
(included in
processing)
1.8
1.8
1 The 2022 percentage has been restated to change the reporting period from Nov '21-Oct '22, to Jan '22-Dec '22. For 2021, the reporting period was Nov '20-Oct '21.
2 Value chain emissions for the periods before 2023 have been adjusted to reflect an updated key value chain model for Powder Coatings, raw material model revisions and the
impact of restating for the Grupo Orbis acquisition. See Basis of preparation for an overview of reporting adjustments related to prior periods.
3 Baseline 2018. For Scope 3 – upstream and downstream combined – the restated 2018 baseline is 14.5 million tons.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
57
SUMMARY TABLE
SOCIAL
People and process safety
Ñ Fatalities employees
Ñ Total reportable injury rate employees/temporary
Unit
number
workers
Ñ Lost time injury rate employees/temporary
workers
Ñ Occupational illness rate employees
/200,000 hours
/200,000 hours
/200,000 hours
Occupational illness frequency rate (OIFR)
/1,000,000 hours
Total illness absence rate employees
Ñ Fatalities contractors (temporary workers plus
%
independent)
Ñ Total reportable injury rate contractors
Ñ Lost time injury rate contractors
Ñ Life-changing injuries
Distribution incidents
Ñ Loss of primary containment – Level 1
Ñ Loss of primary containment – Level 2
Regulatory actions – Level 3
Ñ Regulatory actions – Level 41
Ñ Security incidents Level 3
HSE management
Safety incidents (Level 3)
Safety incidents (Levels 1, 2, 3)
Management audits plus reassurance audits
Environmental certification ISO 14001
number
/200,000 hours
/200,000 hours
number
number
number
number
number
number
number
number
number
number
% of manufacturing
sites
Health and Safety Management certification – ISO
45001
% of manufacturing
sites
AkzoNobel Cares
Members of local communities empowered with
new skills
AkzoNobel Cares projects
number
number
Ambition 2030
2019
2
0.24
0.08
0.003
0.03
2.17
0
0.19
0.09
3
26
3
64
3
0
0
2
3
32
75
53
2020
0
0.23
0.09
0.010
0.04
2.59
0
0.17
0.11
2
15
6
52
0
0
0
0
2
28
76
53
2021
1
0.21
0.11
0.003
0.01
2.66
0
0.12
0.08
2
14
5
67
2
0
4
2
5
29
80
57
2022
0
0.24
0.13
0.003
0.01
3.24
0
0.21
0.06
1
12
2
51
1
1
0
0
1
33
78
55
2023
0
0.31
0.14
0.000
0.00
3.14
0
0.27
0.23
1
21
4
83
0
2
1
0
1
33
81
57
4,078
225
2,669
170
11,193
182
24,225
239
32,035
311
100,000+
2,000+
Ambition 2020-2030
1 A notification of a fine imposed by the UK authorities in December 2022, in response to a process safety incident in 2020 at our Felling site, came in too late to include in the annual
report for 2022. As a result, the RA4 number for 2022 is adjusted from 0 to 1.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
58
SUMMARY TABLE
Age distribution of our employees
Characteristics of own workforce
Number of
employees
Percentage
Employees
Ñ Female executives
Executive Committee female representation
Supervisory Board female representation
Total employee turnover rate
Total employee turnover in headcount1
Voluntary employee turnover rate
Training hours per employee1
Percentage of employees who participated in
regular performance reviews1
Voices – Overall employee engagement index1
Voices – Employee net promoter score (eNPS)1
Voices – Participation rate1
Employees covered by an independent trade union
or collective bargaining agreements
1 Reported as of 2023.
Unit
%
%
%
%
number
%
number
%
number
number
%
%
Age group
Under 30 years old
30-50 years old
Over 50 years old
Total
Characteristics of own workforce
Number of permanent employees (headcount)
Number of temporary employees
Number of full-time employees
Number of part-time employees
Characteristics of own workforce
Number of permanent employees (headcount)
Number of temporary employees
Number of full-time employees
Number of part-time employees
AkzoNobel Report 2023
3,958
22,127
9,487
35,572
Female
8,741
921
8,752
910
EMEA
15,764
534
14,817
1,481
2019
2020
2021
2022
2023
Ambition 2025
18
33
33
14
7
21
40
38
13
5
22
43
33
14
8
26
50
38
15
9
56
59
49
45
30
25
11
38
13
4,657
7
2.5
95
4.0
11
89
48
Number of
employees
Percentage
9,662
25,901
9
35,572
27
73
—
100
11
62
27
100
Male
24,138
1,763
25,204
697
Gender
Female
Male
Other
Total
Other
7
2
9
—
Latin America
North America
North Asia
South APAC
5,021
252
5,173
100
3,097
0
3,086
11
4,024
1,460
5,482
2
4,980
440
5,407
13
Strategy | Sustainability | Leadership and governance | Financial information
59
LEADERSHIP AND GOVERNANCE
An overview of our leadership and its activities
during the year, along with details of our corporate
governance structure, risk management, executive
remuneration, integrity and compliance manage-
ment, and AkzoNobel and the capital markets.
Our Board of Management and Executive
Committee
Statement of the Board of Management
Statement of Chair of Supervisory Board
Our Supervisory Board
Report of the Supervisory Board
Corporate governance statement
Risk management
Integrity and compliance management
Remuneration report
60
61
62
63
63
71
79
82
86
AkzoNobel and the capital markets
103
AkzoNobel Report 2023
Our Aerospace Coatings business is helping
airlines and operators take aircraft paint
maintenance to new heights of efficiency –
thanks to the launch of the Aerofleet Coatings
Management service. It uses data gathered over
several years and makes it easier and more
accurate to determine when an aircraft needs to
be repainted.
Strategy | Sustainability | Leadership and governance | Financial information
60
OUR BOARD OF MANAGEMENT AND EXECUTIVE COMMITTEE
1. Grégoire (Greg) Poux-Guillaume • CEO and Chair of
the Board of Management and Executive Committee
(1970, FR) • Greg joined AkzoNobel in November 2022 as
CEO and Chair of the Board of Management, bringing with
him 30 years of experience in various industrial businesses
and private equity. He was previously CEO of Sulzer (2015
to 2022) and before that, CEO of GE Grid Solutions. Greg
is also a non-executive member of the Board of Directors
of medmix Ltd., a publicly listed MedTech company.
2. Maarten de Vries • CFO and member of the Board of
Management and Executive Committee (1962, NL) •
Maarten joined AkzoNobel in 2018. He spent the previous
three years as CFO at Intertrust Group and TNT Express.
He was a member of the Management Board of Intertrust
Group and the Executive Board of TNT Express. From
2011 to 2014, Maarten was CEO of TP Vision, and prior to
this, held senior positions at Royal Philips Electronics,
including Chief Information Officer and Chief Purchasing
Officer at Group Management Committee level.
3. Karen-Marie Katholm • Chief Integrated Supply Chain
Officer and member of the Executive Committee (1967,
DK) • Karen-Marie joined AkzoNobel in September 2021,
having held various global leadership roles across
sourcing, supply chain and operations. She was previously
Integrated Operations Leader for DuPont Nutrition &
Biosciences – having joined Danisco A/S (later DuPont) in
2009. Karen-Marie has over 20 years' experience working
at various food manufacturers, such as Orkla, United
Biscuits and Arla Foods. She’s also a non-executive
member of the Boards of Directors of NTG Nordic
Transport Group A/S and Chr. Augustinus Fabrikker.
4. Charlotte van Meer • General Counsel and member
of the Executive Committee* (1979, NL) • Charlotte
rejoined AkzoNobel in January 2024, having previously
worked for the company for over ten years, when she held
various roles in the Legal function, including Head of Legal
EMEA, Director Legal Corporate and Corporate Secretary.
Before rejoining AkzoNobel, she was Chief Legal Officer of
metal packaging company Trivium for four years.
*Officially appointed as of January 1, 2024, succeeding Dr. Hilka Schneider
AkzoNobel Report 2023
5. Armand Sohet • Chief Human Resources Officer and
member of the Executive Committee (1965, FR) • Armand
joined AkzoNobel in July 2023 (succeeding Joëlle Boxus)
and has extensive experience heading the HR function of
publicly traded companies. He has led transformations in
industrial businesses with complex manufacturing
operations, but also as the HR partner of multi-channel
commercial organizations. Armand was previously CHRO
and Chief Sustainability Officer of Sulzer for seven years.
6. Simon Parker • Member of the Executive Committee
(1966, UK) • Simon has 33 years of experience in multi-
national businesses and more than 25 years of experience
within Coatings, having been responsible for many
business transformations and restructurings in the
operating units of AkzoNobel. He joined the company in
1997 and held various business leadership positions
before taking over as Business Unit Director for Marine
and Protective Coatings in April 2022.
7. Jan-Piet van Kesteren • Member of the Executive
Committee (1972, NL) • Jan-Piet joined AkzoNobel in
March 2010. In 2017, he was appointed Business Unit
Director for Decorative Paints in Europe, Middle East and
Africa. Previously, Jan-Piet was Vice President Foods &
Beverages for Unilever’s North Africa Middle East
business, based in the UAE, following eight years with
Unilever in the Netherlands.
8. Patrick Bourguignon • Member of the Executive
Committee (1965, BE) • Patrick joined AkzoNobel in
October 2019 as Business Unit Director for Automotive
and Specialty Coatings. He has more than 35 years of
experience, having held several positions across different
industries in sales, distribution and general management.
Previously, Patrick was with UNILIN for 12 years.
9. Daniel Campos • Member of the Executive Committee
(1972, BR) • Daniel joined AkzoNobel in September 2015
as Business Unit Director for Decorative Paints Latin
America. He previously worked at Natura for three years,
managing Global Personal Care for the Brazilian health
and beauty leader. Before that, Daniel spent 19 years at
Procter & Gamble, where he held several positions in
general management, sales and marketing roles.
Strategy | Sustainability | Leadership and governance | Financial information
61
STATEMENT OF THE BOARD OF MANAGEMENT
The Board of Management’s statement
on the financial statements, the
management report and internal
controls.
We prepared this Report 2023 in line with International
Financial Reporting Standards, as adopted by the EU
(IFRS), and the financial reporting requirements included in
Part 9 of Book 2 of the Dutch Civil Code.
To the best of our knowledge:
•
•
The financial statements in this Report 2023 give a
true and fair view of the assets and liabilities, financial
position and profit or loss of our company, and the
undertakings included in the consolidation taken as a
whole
The management report in this Report 2023 includes a
fair review of the position at December 31, 2023, the
development and performance during the financial
year 2023 of AkzoNobel, and the undertakings
included in the consolidation taken as a whole, and
describes our principal risks
The Board of Management is responsible for the
establishment and adequate functioning of a system of
governance, risk management and internal controls within
our company. Consequently, a broad range of processes
and procedures has been implemented, designed to
provide control by the Board of Management over the
company’s operations. These include measures regarding
the general control environment, such as a Code of
Conduct, policies and procedures and authority rules, as
well as specific measures, such as a risk management
system, a system of controls and a system of letters of
financial representation by responsible management at
various levels within our company.
All these processes and procedures are aimed at
providing a reasonable level of assurance that we have
identified and managed the significant risks of our
company, and that we meet our operational and financial
AkzoNobel Report 2023
•
•
•
These systems provide reasonable assurance that the
financial reporting does not contain material
inaccuracies
It is justified that the financial reporting is prepared on
a going concern basis
There are no material risks associated with the
strategy and activities of AkzoNobel and the
undertakings included in the consolidation, including
the strategic, operational, compliance and reporting
risks, or uncertainties that could reasonably be
expected to have a material adverse effect on the
continuity of the company’s operations for the 12-
month period after report preparation
We have discussed the above opinion and conclusions
with the Audit Committee, the Supervisory Board and the
external auditor.
Amsterdam, February 26, 2024
The Board of Management
Greg Poux-Guillaume, CEO and Chair of the Board of
Management
Maarten de Vries, CFO and member of the Board of
Management
objectives in compliance with applicable laws and
regulations. For a detailed description of the company’s
internal risk management, please refer to the Risk
management chapter.
The Integrity and Compliance function makes policies,
rules and procedures available through the Policy Portal,
manages the online and face-to-face compliance training
program, provides legal expert support and manages
investigations related to our SpeakUp! complaints
procedure. For a more detailed description of the integrity
and compliance framework, please refer to the Integrity
and compliance management chapter.
The Internal Control function maintains AkzoNobel’s
Internal Control Framework, monitors the compliance and
includes updates regarding the emergence of new risks.
They support the annual review of the design and
effectiveness of the system of governance, risk
management and internal controls of the Board of
Management. Internal Audit provides comfort to the Board
of Management, as well as the Supervisory Board, that our
system of risk management and internal controls – as
designed and represented by management – is adequate
and effective.
While we routinely work towards continuous improvement
of our processes and procedures regarding financial
reporting, the Board of Management confirms that
according to the current state of affairs, to the best of its
knowledge:
•
The Report 2023 provides sufficient insights into any
failings in the effectiveness of the internal risk
management and control systems with regard to the
risks associated with the strategy and activities of
AkzoNobel and the undertakings included in the
consolidation, including the strategic, operational,
compliance and reporting risks
There have been no material failings in the
effectiveness of internal risk management and control
systems
•
Strategy | Sustainability | Leadership and governance | Financial information
62
STATEMENT OF THE CHAIR OF THE SUPERVISORY BOARD
BEN NOTEBOOM
Chair 1958, NL
Initial appointment: 2023
Term of office:
2023 – 2027
Chair of the Supervisory Board of Koninklijke Vopak N.V.;
Vice Chair of the Supervisory Board of Koninklijke KPN
N.V.; Chair of the Board of Trustees of the Cancer
Center Amsterdam.
2023 was a solid year for AkzoNobel as the
company demonstrated its ability to
recover strongly from the challenges of a
difficult and often unpredictable macro-
economic climate.
From an operations perspective, strong pricing discipline,
working capital normalization and cost reduction have
been key to us partially offsetting headwinds such as cost
inflation and adverse currency effects, while declines in
raw material prices proved favorable in the second half of
the year. Management deserves credit for acting decisively
to implement its four strategic priorities – margin
management, cost reduction, working capital
normalization and deleveraging – which ensured that the
company was able to deliver and make good progress on
its strategic ambitions.
As we move into 2024, it’s a question of staying financially
disciplined – reducing both debt and leverage – while
maintaining our strategic direction and further building on
the power of our brands. Unlocking the significant value to
be gained by improving operations has been identified as
a major priority. As a Supervisory Board, we fully support
the decision to implement a long-term industrial excellence
plan, which is now underway. It’s focused on reducing
AkzoNobel Report 2023
complexity, improving capacity utilization and investing in
the modernization of the company’s sites. There’s
significant value to be gained and the plan will be an
important part of our strategy for the next few years.
Although it was a relatively quiet year in terms of M&A, we
did complete the acquisition of the Huarun business in
China. It was a significant transaction, which will further
boost our position in decorative paints in the region. It’s
also been encouraging to see the integration of the Grupo
Orbis activities – acquired in 2022 – continue to go
smoothly. Both of these investments highlight the
company’s commitment to strengthening its global
activities and will make important contributions to
AkzoNobel’s long-term growth potential.
The company is determined to continue moving forward
and the Supervisory Board was pleased to see
management address several key improvement areas
across the organization. The introduction of the new
Voices employee engagement platform and survey was
particularly notable. The level of engagement exceeded the
industry average, which is an admirable achievement. It
will be interesting to see the impact the platform has on
helping to create a more stimulating and fulfilling work
environment.
The company’s Paint the Future collaborative innovation
ecosystem also continued to gain momentum during the
year. The latest 24-hour challenge – staged in November
2023 – was focused on reducing the collective carbon
footprint of the vehicle repair industry. Working with several
partners, the aim is to develop a shared approach to
tackling climate change. It’s an excellent example of how
the company is looking for meaningful and impactful ways
to reduce carbon emissions across its own operations and
the entire value chain.
It's clear from the ongoing implementation of strategic and
operational initiatives that management is working hard to
address today’s challenges, while laying the necessary
foundations for the company to thrive tomorrow – which
will pave the way for a future to excite all our stakeholders.
I’m very much looking forward to contributing to the next
phase of AkzoNobel’s transformation.
On behalf of the Supervisory Board, I would like to thank
our shareholders and all other stakeholders for their
continued trust in the company, as well as my Supervisory
Board colleagues, the Board of Management and
Executive Committee for all their efforts during 2023. I'd
also like to express deep appreciation for the continued
hard work and commitment of AkzoNobel’s employees
around the world, who helped to deliver a solid
performance in a far from perfect business climate.
Amsterdam, February 26, 2024
Ben Noteboom
Chair of the Supervisory Board
Strategy | Sustainability | Leadership and governance | Financial information
63
REPORT OF THE SUPERVISORY BOARD
Initial appointment:
2014
Term of office:
2022-2024
1948,
US and UK
Initial appointment:
2022
Term of office:
2022-2026
1961, BE
Initial appointment:
2019
Term of office1:
2023-2027
1969, NL
Initial appointment:
2017
Term of office:
2021-2025
1957, UK
Non-executive Director of
Tesco plc., IHG
(InterContinental Hotels
Group plc.) and Inchcape
plc.
BYRON
GROTE
Deputy Chair
Independent Director and
Chair of the Board of
Directors of Ontex Group
NV; member of the
Supervisory Board of
Lanxess AG; non-executive
member of the Board of
Directors of Etex NV.
HANS
VAN BYLEN
CFO of Koninklijke Ahold
Delhaize N.V.; member of
the Supervisory Board of
Pon Holdings B.V.
JOLANDA
POOTS-BIJL
Chair of Johnson Matthey
plc.; member of the
Supervisory Board of
Covestro A.G.
PATRICK
THOMAS
1 Stepped down per January 31, 2024
AkzoNobel Report 2023
CEO and President of
Novozymes A/S; member of
Business Council for United
Nations; member of the Board
of Trustees of US Council for
International Business; Vice-
Chair of the B Team; member
of the Board of SBTi.
ESTER
BAIGET
Non-executive Director of
Reckitt Benckiser plc. and
Bunzl plc.
DR. PAMELA
KIRBY
Deputy Chair of the Supervisory Board
of Euronext N.V.; Chair of the
Supervisory Boards of Euronext
Amsterdam N.V. and NIBC Bank N.V.;
member of the Boards of Directors of
FWD Group Limited and State
Academy of Finance and Economics;
Trustee of the Erasmus University
Trust Fund; Senior Advisor to Bank
of America Europe DAC.
DICK
SLUIMERS
Initial appointment:
2022
Term of office:
2022-2026
1971, ES
Initial appointment:
2016
Term of office:
2020-2024
1953, UK
Initial appointment:
2015
Term of office:
2023-2025
1953, NL
Meetings and attendance
The Supervisory Board values the attendance of its
meetings by all members. If Supervisory Board members
are unable to attend a Supervisory Board or committee
meeting, they inform the relevant Chair of their reasons.
Supervisory Board members always receive the materials
for each specific meeting, allowing them to offer input and
discuss any agenda items with the relevant Chair.
In 2023, the Board of Management attended all meetings
of the Supervisory Board. The Executive Committee
attended the majority of the meetings. Almost all plenary
sessions of the Supervisory Board were preceded or
succeeded by executive sessions of the Supervisory
Board, with and without the CEO in attendance. The Chair
had regular one-on-one calls with all Supervisory Board
members to discuss individual impressions on the
functioning of the Supervisory Board and items covered.
The Supervisory Board aims for all (regular) meetings to be
held physically. When needed, virtual participation is made
possible with video conference capabilities, enabling
Supervisory Board members to perform their role
appropriately.
Strategy updates
During 2023, the Supervisory Board continued to allocate
adequate time to discuss strategic activities. It received
regular updates from the Executive Committee on the
progress made towards the ambitions of the company’s
strategy, as well as on the underlying programs supporting
the strategy. With a focus on sustainable long-term value
creation, the Supervisory Board reviewed and advised on
the three-year strategy for each of the eight business units,
as well as the three overarching pillars across our portfolio
of businesses, as further described in the Strategy
chapter.
Strategy | Sustainability | Leadership and governance | Financial information
64
REPORT OF THE SUPERVISORY BOARD
meetings, following recommendations from the
Remuneration Committee. For more details, see the report
of the Remuneration Committee.
Discussions on corporate performance were held at each
regular Supervisory Board meeting and included business
reviews and performance updates from corporate
functions. Forward-looking targets were also addressed in
light of these reviews. The Supervisory Board diligently
reviewed budgets and operating plans, taking into account
the macro-economic uncertainty. Following assessments,
the Supervisory Board approved the proposed budgets
and operating plan for 2024.
During the year, the Supervisory Board was pleased to see
the company continuing to benefit from management’s
strategic initiatives, including its focus on margin
management, cost reduction, working capital
normalization and deleveraging. The nature of this
performance and the company’s capital allocation
priorities were all considered in the Supervisory Board’s
approval of the dividend proposal. Further details on the
2023 dividend proposal can be found in the Financial
information.
Industrial excellence
The Supervisory Board regularly received updates on the
ambitions and roll-out of the industrial excellence program,
focused on reducing complexity, enhancing productivity
and optimizing our network through investment and
modernization at our anchor sites. The Supervisory Board
advised on the improvement of industrial processes, which
is considered a key long-term strategic priority. Further
details are included the Strategy chapter.
Functional updates
Throughout the year, the Supervisory Board reviewed and
discussed functional updates, including Finance,
Integrated Supply Chain, Human Resources,
Sustainability, Innovation and Information Management.
The Supervisory Board received comprehensive market
updates and advised on contingency plans. In addition,
the Supervisory Board reviewed the developments and
initial outcomes of the survey of the new employee
engagement platform, Voices.
Sustainability
The Supervisory Board views sustainability as an intrinsic
value driver in the work of all businesses and functions.
During 2023, the Supervisory Board continued to assess
sustainability as part of strategy and targets and advised
on further embedding related considerations into decision-
making. During quarterly updates on sustainability, the
Supervisory Board reviewed and advised on the progress
made towards the company’s sustainability ambitions. The
Supervisory Board reviewed the company’s response to
climate change, focusing on efforts to reduce emissions
across the whole value chain (including Scope 1, 2 and 3).
Deep dives were carried out for specific topics, such as
carbon footprint and circularity. As part of its oversight of
the integrity and quality of the company's sustainability
reporting, the Supervisory Board received updates on the
various programs that have been initiated, and on
progress made in relation to Corporate Sustainability
Reporting Directive (CSRD) compliant reporting.
The company’s sustainability ambitions and progress are
further considered as part of the business reviews and
functional updates, and as part of the Supervisory Board’s
review of the company’s innovation efforts and programs.
Further details are included in the Sustainability
statements.
Performance and management planning
Individual Board of Management and Executive Committee
performance was addressed in Supervisory Board
Supervisory Board attendance record
Nils Smedegaard Andersen1
Ben Noteboom2
Ester Baiget
Jolanda Poots-Bijl
Hans Van Bylen
Byron Grote
Pamela Kirby
Dick Sluimers
Patrick Thomas
Regular SB
Additional SB
3/3
6/6
9/9
6/9
8/9
9/9
8/9
9/9
9/9
1/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1
AC
8/8
5/8
8/8
8/8
RC
2/2
4/4
5/6
6/6
6/6
NC
1/1
4/4
5/5
5/5
4/5
The table indicates the meeting attendance for the Supervisory Board (SB), the Audit Committee (AC), the Remuneration Committee (RC) and the Nomination Committee (NC) for
regular and additional meetings.
The attendance record shows the nine regular, scheduled meetings and one additional meeting of the Supervisory Board. The additional meeting was scheduled ad hoc.
1 Stepped down after the AGM held on April 21, 2023.
2 Appointed to the Supervisory Board and Remuneration Committee as per April 21, 2023, and appointed to the Nomination Committee as per May 19, 2023.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
65
REPORT OF THE SUPERVISORY BOARD
Risk management
The Supervisory Board views risk management as an
essential mechanism to safeguard the business and
assets of the company, and to secure sustainable long-
term performance and value creation. As the Supervisory
Board sought to assure itself of the robustness of the
company’s risk mitigation and internal controls, it received
multiple risk management updates during the year.
The Board of Management and Executive Committee
maintain the risk management framework and system of
internal controls. The Supervisory Board and the Audit
Committee monitor the implementation of risk mitigating
measures for the key risks, as identified by the Board of
Management and the Executive Committee during the
year by means of risk updates and reviews. Further details
are included in the Risk management chapter.
Corporate governance
Following the implementation of the revised Dutch
Corporate Governance Code, with effect from January 1,
2023, a review of the company’s corporate governance
framework and systems was performed. Certain practices
were revised and the Supervisory Board is satisfied the
Supervisory Board activities 2023
company has complied with the Code on a “comply or
explain” basis. Further details can be found in the
Corporate governance statement.
Talent management and succession
planning
Throughout the year, the Supervisory Board discussed
and undertook detailed succession planning. This included
taking the time to discuss its own composition and
succession plans in order to ensure continued
effectiveness.
With Nils Smedegaard Andersen stepping down after the
2023 AGM, the Supervisory Board nominated Ben
Noteboom for appointment to the Supervisory Board. The
Supervisory Board further nominated Jolanda Poots-Bijl
and Dick Sluimers for reappointment to the Supervisory
Board. Dick Sluimers was initially appointed to the
Supervisory Board in 2015, and reappointed for a second
four-year term in 2019. He has been Chair of the
Remuneration Committee since June 2017 and member
of the Nomination Committee since February 2020. Prior
to this, he was an Audit Committee member. Given his
extensive experience with AkzoNobel – and to ensure the
continuity and effectiveness of the Supervisory Board and
the Remuneration Committee while allowing for
appropriate succession planning – the Supervisory Board
nominated Dick Sluimers to be reappointed to the
Supervisory Board for a third term of two years. Jolanda
Poots-Bijl and Dick Sluimers did not take part in the
deliberations and voting regarding their own
reappointments. The appointment and reappointments
were approved at the AGM held on April 21, 2023. Ben
Noteboom was elected as Chair of the Supervisory Board.
The Supervisory Board also discussed the succession of
Jolanda Poots-Bijl, who stepped down as member of the
Supervisory Board as of January 31, 2024.
The requirements of the Corporate Governance Code, the
Supervisory Board’s profile, skills matrix and its policy on
diversity and inclusion were considered throughout these
processes. Further information can be found in the report
of the Nomination Committee.
The Supervisory Board further discussed and supported
changes to the composition of the Executive Committee.
With Michael Friede stepping down as Chief Commercial
Officer - Performance Coatings as of March 1, 2023,
Q1
Q2
Q3
Q4
• Review Q4 2022 financials and performance
• 2022 financial statements, annual report and profit
allocation
• Assurance report sustainability statements 2022
• External audit report 2022
• Final 2022 dividend
• Final budget 2023
• Strategic initiatives update
• Business updates
• Investor Relations update
• HSE&S full-year report
• Risk management risk session outcomes
• M&A strategy update
• Supervisory Board succession planning
• Review Q1 2023 financials and performance
• Remuneration Board of Management 2023
• Strategic initiatives update
• Investor Relations update
• HSE&S update
• Tax update
• M&A strategy update
• Business updates
• Industrial excellence update
• Sustainability/ESG update
• IM strategy update including cybersecurity
• Enterprise risk management update
• Corporate Governance Code 2022 update
• Review Q2 2023 financials and performance
• Investor Relations update
• HSE&S update
• Company strategy update
• Business strategy reviews (Coatings)
• Innovation strategy update
• Strategic initiatives update
• Business updates
• Industrial excellence update
• Sustainability/ESG update
• M&A strategy update
• Review Q3 2023 financials and performance
• Dividend policy
• Interim dividend 2023
• Business strategy reviews (Paints)
• Remuneration Board of Management 2024
• Investor Relations update
• Sustainability/ESG update
• HSE&S update
• Implementation Corporate Governance Code 2022
• Budget 2024
• M&A strategy update
• Industrial excellence update
• Human Resources strategy update (incl. Voices)
• Remuneration policies Board of Management and
Supervisory Board
• Supervisory Board succession planning
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
66
REPORT OF THE SUPERVISORY BOARD
Daniel Campos, Jan-Piet van Kesteren, Simon Parker and
Patrick Bourguignon were appointed to the Executive
Committee to represent the Decorative Paints and
Performance Coatings businesses, effective February 1,
2023. With Joëlle Boxus stepping down as Chief Human
Resources Officer per March 31, 2023, her responsibilities
were taken over on an ad-interim basis until the
appointment of Armand Sohet as new Chief Human
Resources Officer per July 1, 2023. Dr. Hilka Schneider
stepped down as General Counsel as of October 15,
2023, with her responsibilities being taken over on an ad-
interim basis until the appointment of Charlotte van Meer
as new General Counsel per January 1, 2024.
Independence of the Supervisory Board
Supervisory Board members are required to act critically
and independently of one another, the Board of
Management, the Executive Committee and the
company’s stakeholders. Each Supervisory Board
member meets the independence requirements of the
Corporate Governance Code and completed the annual
independence questionnaire addressing the relevant
requirements for independence.
Supervisory Board evaluation
To assess its effectiveness, the Supervisory Board carried
out an internal performance evaluation of itself, its
individual members, its Audit, Remuneration and
Nomination Committees, the Chair, as well as the
relationship with the Board of Management and the
Executive Committee. The process consisted of the
Supervisory Board members completing a confidential
questionnaire.
In a separate meeting without the Board of Management,
the Supervisory Board discussed the results of the
evaluation questionnaires and reflected on the
improvement areas agreed during last year’s evaluation.
The Supervisory Board also discussed the functioning of
the Board of Management and the performance of its
individual members. Feedback was provided to, and
AkzoNobel Report 2023
discussed with, the members of the Board of
Management.
The evaluation concluded that the Supervisory Board and
its committees continue to operate proficiently. The
Supervisory Board composition, and that of its
committees, has the right blend of experience, knowledge,
skills and diversity and there's a dynamic and open
atmosphere between the Supervisory Board and the
Board of Management, as well as the other members of
the Executive Committee. Focus items going forward
include continued attention for executive succession
planning and talent management. Additional time will be
spent on contributing to the development of the group
strategy.
Financial statements and profit allocation
The Board of Management submitted the report and
financial statements, including the report of the Board of
Management, to the Supervisory Board for review and
approval. The financial statements of Akzo Nobel N.V. for
the financial year 2023 were audited by
PricewaterhouseCoopers Accountants N.V. (PwC).
The financial statements and the report were extensively
discussed by the Audit Committee with the external
auditors, in the presence of the CFO, and by the full
Supervisory Board with the Board of Management and the
Executive Committee. Based on these discussions, the
Supervisory Board is of the opinion that the 2023 financial
statements of Akzo Nobel N.\/. form an adequate basis to
account for the supervision provided (see the Financial
information). The Audit Committee monitors the follow-up
by management on the recommendations made by the
external auditors.
The Supervisory Board recommends that the AGM adopts
the financial statements as presented in this Report 2023
and, as proposed by the Board of Management, the
proposed total dividend for 2023 of €1.98 (2022: €1.98),
including a final dividend of €1.54 per share. An interim
dividend of €0.44 (2022: €0.44) per share was paid in
November 2023. This reflects the continued commitment
to providing a stable to rising dividend. The dividend will be
paid in cash.
In addition, it is requested that the AGM discharges the
Board of Management members from their responsibility
for the conduct of business in 2023, and the Supervisory
Board members for their supervision in 2023.
Committees of the Supervisory Board
Nils Smedegaard
Andersen (Chair1)
Ben Noteboom
(Chair2)
Byron Grote
(Deputy Chair)
Ester Baiget
Jolanda Poots-
Bijl5
Hans Van Bylen
Pamela Kirby
Dick Sluimers
Audit
Committee
Remuneration
Committee
Member1
Nomination
Committee
Chair1
Member3
Chair4
Chair
Member
Member
Member
Member
Chair
Member
Member
Member
Patrick Thomas
Member
1 Until April 21, 2023
2 Per May 26, 2023
3 Per April 21, 2023
4 Per May 19, 2023
5 Until January 31, 2024
Audit Committee
All Audit Committee members have extensive accounting
and financial management expertise. Issues discussed in
Audit Committee meetings were reported back to the full
Supervisory Board in subsequent meetings.
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67
REPORT OF THE SUPERVISORY BOARD
External audit
PwC, AkzoNobel’s independent external auditor, reported
in-depth to the Audit Committee on the scope and
outcome of the annual audit of the financial statements,
including the Consolidated financial statements and the
Company financial statements and related notes, as well
as on the scope and outcome of the limited assurance
engagement on the selected non-financial indicators
included in the Sustainability statements. The Audit
Committee held independent meetings with the external
auditor and critically reviewed and constructively
challenged their audit approach, fees, risk assessment and
audit plan. The Audit Committee performed an annual
review of the services of the external auditor, and at each
meeting considered and assessed the status of the
auditor’s independence.
In line with applicable regulations, the PwC lead partner in
charge of the AkzoNobel account will change as of the
audit of the 2024 financial statements. The new lead
partner has been selected. The Audit Committee also
started the preparations for mandatory auditor rotation.
The external audit firm will be replaced as of the audit of
the 2026 financial statements. The external auditor
selection process has started and will largely take place
during 2024, for submission and approval at the AGM in
2025. Further details on the external auditor can be found
in the Corporate governance statement.
Risk management and internal control
systems
The Audit Committee reviewed the company’s overall
approach to governance, risk management and internal
controls, its processes, outcomes, financial and
sustainability reporting and disclosures. It received regular
updates from internal auditors and functions, and was
provided with comprehensive risk and internal control
reports during the year. In addition, the Audit Committee
received periodic updates on the results of testing of
internal control effectiveness, related remediation plans
and assessments of overall control effectiveness. In its
review, the Audit Committee considered the impact of
AkzoNobel Report 2023
changes to systems, processes and organization, such as
the integration of the Grupo Orbis processes. The Audit
Committee also met regularly with senior executives.
In fulfilling its oversight responsibilities in relation to risk
management and internal control systems, the Audit
Committee also received updates from functions such as
Finance, Treasury, Information Management and Tax
throughout the year. In addition, the Audit Committee
reviewed the proposed budget and operating plan. During
2023, the Audit Committee received several updates on
the IT security framework, including the corporate security
program and the security program for the manufacturing
sites.
Integrity and compliance
The Executive Committee is responsible for maintaining a
culture of integrity and ensuring an effective integrity and
compliance program and control framework. Part of these
responsibilities are delegated to specific committees and
the Integrity and Compliance team. The Supervisory
Board’s Audit Committee oversees this responsibility and
reviews the regular integrity and compliance reports.
Internal audit
The Internal Auditor presented all main audit findings to the
Audit Committee and discussed the progress of the audit
plan. During the year, the Audit Committee approved
Internal Audit’s plan and strategy, and also agreed on the
budget and resource requirements for the function. The
Audit Committee met separately with the Internal Auditor
during the year to discuss the results of the audits
performed and the status of the follow-up on action plans
identified. In 2023, the Audit Committee was satisfied with
the effectiveness of the Internal Audit function. With the
former Head of Internal Audit leaving AkzoNobel, the Audit
Committee supported the succession of the Head of
Internal Audit per March 1, 2023, which was subsequently
approved by the Supervisory Board.
Results and financial statements
Before each publication of the quarterly results and the
financial statements, the Audit Committee reviewed the
financial results. In addition, the Audit Committee reviewed
and commented on the interim and final dividend
proposals and on reports and press releases to be
published. This was in addition to the work undertaken by
the company’s Disclosure Committee in reviewing the
company’s disclosure of potentially share price sensitive
information. Based on these discussions, the Audit
Committee advised the Supervisory Board on the
publications and disclosures, as well as on proposals
regarding the interim and final dividends. All quarterly and
annual releases of financial results were approved by the
full Supervisory Board prior to publication and release.
To ensure its effectiveness and expertise, the Audit
Committee was provided with regular updates on IFRS
developments and the anticipated impact of these
developments on the financial statements. In addition, the
Audit Committee reviewed and assessed management
assertions made in regard to relevant accounting
treatments. The external auditor, as required by auditing
standards, also considers the risk of management override
of controls. Nothing has come to the attention of the Audit
Committee to suggest any material misstatement related
to suspected or actual fraud involving management
override of controls.
Sustainability reporting
The Audit Committee advised on the company’s roadmap
in anticipation of the upcoming sustainability reporting
frameworks. It received bi-annual updates on the progress
made in relation to CSRD compliant reporting and
reviewed and discussed the process and outcome of the
double materiality assessment in light of CSRD. For more
information, see the Sustainability statements.
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REPORT OF THE SUPERVISORY BOARD
Audit Committee activities 2023
Q1
Q2
Q3
Q4
• Review Q4 2022 financials and performance
• 2022 Financial statements, annual report and profit
allocation
• External audit report 2022
• Assurance report sustainability statements 2022
• Final dividend 2022
• Review risk management and internal control 2022
report
• Investor Relations update
• Internal Audit Q4 2022 report
• HSE&S audit findings
• Pension update
• Integrity and Compliance report 2022
• IT/cybersecurity update
• Exposure report
• Appointment Head of Internal Audit
• Review Q1 2023 financial statements
• Internal Audit Q1 2023 report
• Review evaluation external auditor
• Review year-to-date audit findings
• Review and approval PwC audit plan
• Audit fee 2023
• Review auditor rotation plan
• Investor Relations update
• Treasury update
• Tax update
• Sustainability reporting update
• Internal Audit strategy update
• Integrity and Compliance update
• IT/cybersecurity update
• Review Q2 2023 financial statements
• Internal Audit Q2 2023 report
• Investor Relations update
• Review year-to-date audit findings
• Review Q3 2023 financial statements
• Dividend Policy
• Interim dividend 2023
• Internal Audit Q3 2023 report
• Sustainability reporting update
• Integrity and Compliance update
• Auditor rotation incl. review RFP
• Budget 2024
• Internal Audit Plan 2024
• Hard close audit report
• Investor Relations update
• Tax update
• Change lead partner external auditor
• Finance transformation update
Remuneration Committee
Management performance review
The work of the Remuneration Committee during Q1
focused on 2022 performance, individual performance
reviews of Board of Management members and the
Executive Committee. The Remuneration Committee also
reviewed various incentive plans, the economic
circumstances and the relative performance compared
with top peers.
Remuneration Policy review
In 2023, the Remuneration Committee and Supervisory
Board reviewed the remuneration policies for the Board of
Management and the Supervisory Board to assess
whether these were still in line with the company’s strategy
and financial targets. Following such review, the
Supervisory Board will propose amendment of the
remuneration policies for the Board of Management and
Supervisory Board for consideration by shareholders at the
2024 AGM. Further information can be found in the
Remuneration report.
Management salary review
The Remuneration Committee reviewed the base salaries
and established relevant forward-looking target ranges for
variable remuneration of Board of Management members
and other Executive Committee members. The base
salaries will continue to be assessed in light of market
conditions, the reward structures of peer group companies
and performance. The Remuneration Committee
considered the pay ratios within the company and how
these compare with peer group companies. Forward-
looking target ranges for variable remuneration of the
Board of Management were discussed. Further
information can be found in the Remuneration report.
Remuneration Committee activities 2023
Q1
Q2 and Q3
Q4
• Review of management performance 2022
• Approval of 2022 pay-out under Short-term Incentive Plan and vesting of
shares under Long-term Incentive Plan
• Review of CFO remuneration
• 2022 Remuneration report
• Review Remuneration Policy for Board of Management
• Review of management base salaries for 2023
• Target setting 2023
• TSR peer group review
AkzoNobel Report 2023
• Review Remuneration Policy for Board of Management and Supervisory
Board
• Target setting 2023
• Supervisory Board remuneration
• Preparation of 2023 Remuneration report
• Review of 2023 (preliminary) performance outlook
• Review Remuneration Policy for Board of Management and Supervisory
Board
• Review of management base salaries for 2024
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69
REPORT OF THE SUPERVISORY BOARD
Nomination Committee
Supervisory Board succession
During 2023, the Nomination Committee continued to
discuss the size, structure and composition of the
Supervisory Board. Following thorough consideration, the
Nomination Committee recommended the appointment of
Ben Noteboom and the reappointment of Jolanda Poots-
Bijl and Dick Sluimers to the Supervisory Board for
consideration by the shareholders at the AGM of April 21,
2023. The Nomination Committee also discussed the
succession of Jolanda Poots-Bijl, who stepped down as a
member of the Supervisory Board as of January 31, 2024.
The Supervisory Board has updated its skills matrix, as
shown on the next page. It contains full details of the
current Supervisory Board composition. The schedule of
Supervisory Board succession and the profiles of the
Supervisory Board members can also be found on our
website.
Board of Management and executive
succession
During 2023, the Nomination Committee was consulted
and gave its advice regarding the composition of the
Executive Committee and the succession of the Chief
Human Resources Officer and General Counsel. The
Nomination Committee was further consulted on talent
management and the company’s new Diversity, Equity and
Inclusion (DE&I) strategy.
Nomination Committee activities 2023
Q1 and Q2
Q3 and Q4
• Supervisory Board succession
• Supervisory Board succession
planning
planning
• Review (re)appointment
• Board of Management and
scheme
• Review composition
Supervisory Board committees
Executive Committee
succession planning and talent
management
• Update skills matrix
• Review Diversity, Equity and
Inclusion Policy
AkzoNobel Report 2023
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70
REPORT OF THE SUPERVISORY BOARD
Supervisory Board skills and profiles
Independent
Consumer goods
Industrials
Buildings and infrastructure
Transportation
(International) business, commerce, finance/economics
Scientific/information technology experience
Public sector experience
Management experience
Business strategy planning
Investor relations
Manufacturing experience
Supply chain/logistics experience
Social, environmental, sustainability experience (ESG)
Finance expert
Four or less external directorships
Dutch/EU national
Non-EU national
Pensions experience
Business-to-business sales experience
R&D experience
Legal experience
Industrial/employment relations
Risk management
Consulting
(f) = female, (m) = male
Additional remarks
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The members of the Supervisory Board would like to reiterate their appreciation to the
Board of Management and Executive Committee, and to all the company’s employees
around the world, for their outstanding dedication and hard work during the year.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
71
CORPORATE GOVERNANCE STATEMENT
AkzoNobel aspires to the highest
standards of corporate governance and
seeks to consistently enhance and
improve corporate governance
performance, emphasizing
transparency and a culture of
sustainable long-term value creation.
Akzo Nobel N.V. is a public limited liability company
(naamloze vennootschap) established under the laws of
the Netherlands, with common shares listed on Euronext
Amsterdam. AkzoNobel has a sponsored level 1 American
Depositary Receipt (ADR) program and ADRs can be
traded on the international OTCQX platform in the US.
The company’s management and supervision are
organized under Dutch law in a so-called two-tier system,
comprising a Board of Management (solely composed of
executive directors) and a Supervisory Board (solely
composed of non-executive directors). The Supervisory
Board supervises and advises the Board of Management
and ensures a strong external presence in the governance
of the company. The two Boards are independent of each
other and are accountable to the Annual General Meeting
of shareholders (AGM) for the performance of their
functions.
Our corporate governance framework is based on the
company’s Articles of Association, the requirements of the
Dutch Civil Code, the Dutch Corporate Governance Code
2022 (the “Code”) and all applicable laws and regulations,
including securities laws. The Code contains principles and
best practices for Dutch companies with listed shares.
Deviations from the Code are explained in accordance
with the Code’s “comply or explain” principle.
With the exception of those aspects of our governance
which can only be amended with the approval of the AGM,
the Board of Management and the Supervisory Board may
make adjustments to the way the Code is applied, if this is
AkzoNobel Report 2023
considered to be in the best interests of the company.
Where changes are made, these will be reported and
explained in the annual report for the relevant year and
discussed at the subsequent AGM.
In 2022, a revised version of the Code was published by
the Corporate Governance Code Monitoring Committee
(www.mccg.nl). The revised Code was implemented with
effect from January 1, 2023, and focuses on sustainable
long-term value creation and related reporting, diversity
and inclusion, and other relevant topics. A review of the
company’s corporate governance framework and systems
in the context of compliance with the Code was performed
and a gap analysis was carried out highlighting certain
areas or practices that required amendment. The gap
analysis was reviewed by the Board of Management and
the Supervisory Board and relevant revisions to existing
practices were implemented. In addition, the revised Code
has been reflected in the Rules of Procedure of the Board
of Management and the Rules of Procedure of the
Supervisory Board, which are both available on our
website.
The company also subscribes to, and applies, the
principles of the VNO-NCW Tax Governance Code.
Further information on this is available on our website:
AkzoNobel’s approach to tax. For the full version of the
Tax Governance Code, visit www.vno-ncw.nl/
taxgovernancecode
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72
CORPORATE GOVERNANCE STATEMENT
Board of Management and Executive
Committee
The Board of Management is entrusted with the
management of the company. When it comes to the
management of our business, it operates in the context of
an Executive Committee. The Executive Committee
comprises the Board of Management and other key
officers of the company, led by the CEO.
The composition of the Executive Committee ensures that
functional, operational and commercial expertise is
entrenched at the highest level of the organization. Among
other responsibilities, the Board of Management defines
the company’s strategic direction. It establishes and
maintains internal policies and procedures for effective risk
management and control, manages the realization of the
company’s operational and financial targets, its
sustainability performance and its pursuit of sustainable
long-term value creation. In fulfilling their duties, Board of
Management members are assisted by the Executive
Committee and guided by the interests of the company
and its affiliated enterprises, taking into consideration the
relevant interests of the company’s stakeholders.
The Board of Management takes precedence; all
Executive Committee decisions require a majority of the
Board of Management members. The Board of
Management can decide to reserve decisions for itself.
The Board of Management members remain accountable
for all decisions made by the Executive Committee. The
Board of Management is accountable for its performance
to the Supervisory Board and is accountable to the
shareholders of the company at the AGM. The Executive
Committee members who are not also Board of
Management members, and the CFO, report to the CEO.
The Supervisory Board has regular, direct interaction with
Executive Committee members, and all Executive
Committee members attend most Supervisory Board
meetings.
AkzoNobel Report 2023
The CEO leads the Executive Committee in its overall
management of the company. He is the main point of
liaison with the Supervisory Board. The CFO is responsible
for overseeing AkzoNobel’s finances, its corporate control,
investor relations and information management.
circumstances described later in this section) appointed on
the basis of non-binding nominations by the Supervisory
Board. In such cases, resolutions to appoint a member of
the Supervisory Board or the Board of Management
require a simple majority of the votes cast by shareholders.
The tasks, responsibilities and procedures of the Board of
Management and Executive Committee are set out in their
Rules of Procedure. These rules have been approved by
the Supervisory Board and are available on our website.
Authority to represent the company is vested in the two
members of the Board of Management, acting jointly. The
Board of Management has also delegated a level of
authority to corporate agents, including members of the
Executive Committee. The list of authorized signatories is
available from the Dutch Chamber of Commerce.
The Directors of the company’s business units and the
Corporate Directors in charge of the different functions
report to individual Executive Committee members with
specific responsibility for their activities and performance.
Appointment
Board of Management members are appointed and
removed from office by the AGM. The current Board of
Management members were first appointed by
Extraordinary General Meetings (EGMs) held in 2022 and
2017, with the CFO having been reappointed for another
four-year term at the 2022 AGM. The other Executive
Committee members are appointed by the CEO, after
consultation with the Supervisory Board. Board of
Management members are in principle appointed for a
term not exceeding four years, with the possibility of
reappointment.
As described later in this section, the Meeting of Holders
of Priority Shares has the right to make binding
nominations for the appointment of members of the Board
of Management and the Supervisory Board. However, as
the company subscribes to the principles of the Code in
general, members of the Supervisory Board and the Board
of Management are (with the exception of those
Under certain conditions specified in the Articles of
Association, shareholders may also be entitled to nominate
Supervisory Board or Board of Management members for
appointment. Such appointments require a two-thirds
majority, representing at least 50% of the outstanding
share capital, in order to be adopted at an AGM (or EGM).
Diversity and inclusion
AkzoNobel believes in the strength of diversity and
inclusion and, in accordance with the Code, a policy on
diversity and inclusion has been adopted for the
composition of the Board of Management and the
Executive Committee.
The policy on diversity and inclusion for the composition of
the Board of Management and Executive Committee is
recognized and described in the Diversity, Equity and
Inclusion Policy (DE&I Policy) for the executive level, Board
of Management and Supervisory Board, as published on
our website. The objective of this DE&I Policy is to enrich
the Board of Management and Executive Committee’s
perspective, improve performance, increase member value
and enhance the probability of achievement of the
company’s goals and objectives.
A consistent and structured approach is applied to
succession planning for the Board of Management and
Executive Committee, taking into account the
implementation of the relevant DE&I Policy.
AkzoNobel currently diverges from the gender target of at
least 30% female and at least 30% male Board of
Management members. This is primarily due to the size of
the Board of Management being only two members. This
divergence is justified and has ensured the best
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CORPORATE GOVERNANCE STATEMENT
candidates for the roles were nominated by the
Supervisory Board and appointed by shareholders.
AkzoNobel ended 2023 with a gender diversity of 11%
female representatives at Executive Committee level. In
February 2023, the composition of the Executive
Committee changed after expanding it to include four
existing business leaders. Although this impacted the
gender diversity balance, it was deemed to be in the
company's best interest to increase business
representation at Executive Committee level. The
percentage improved in January 2024 to 22%. This still
diverges from the gender target of at least 30% female
and at least 30% male Executive Committee members.
Succession planning efforts are in place to ensure
continued improvement of the gender balance in the
future.
Detailed information on DE&I, including targets and plans
and initiatives to reach such targets, can be found in the
Sustainability statements and on our website.
Outside directorships
Specific rules on outside board positions of the Executive
Committee members – which are more stringent than the
requirements of the Dutch Civil Code – can be found in the
Rules of Procedure.
Conflicts of interest
During 2023, no transactions were reported under which a
member of the Board of Management or Executive
Committee had a conflict of interest which was of material
significance to the company and to the relevant member.
Remuneration
The current Remuneration Policy for the Board of
Management was last amended in full following approval
by the AGM in 2021, and last updated at the AGM in
2022. The details of this policy can be found in the
Remuneration report. The service contracts of the Board
of Management members contain change of control
AkzoNobel Report 2023
provisions. Further details can be found in the
Remuneration report and Note 25 of the Consolidated
financial statements. The service contracts of the Board of
Management are compliant with the Code. The main
elements of these contracts are available on our website.
Operational Control Cycle
The Executive Committee holds regular meetings to
discuss the implementation of the company’s strategy and
functional agendas. Additional meetings are held to
discuss specific topics as required. The Board of
Management and Executive Committee have delegated
authorities to individual Executive Committee members
and to certain committees and councils. To help plan for
success and ensure alignment within the entire AkzoNobel
organization on the strategic and operational plan, an
Integrated Business Planning (IBP) process is in place
across the company’s global businesses and functions.
IBP provides, on a monthly basis, visibility on the long-
term integrated business and financial plan, which covers
the product portfolio, demand and supply. It therefore
ensures early attention and remedial actions, where
appropriate, on any potential gaps. The monthly IBP cycle
ends with a review by the Executive Committee, where it
assesses the consolidated long-term company
perspective, including risks and opportunities, decides on
escalation and possible scenarios and supervises the key
performance indicators with corrective actions, if
applicable.
Culture
The Board of Management and Executive Committee
promote openness and engagement through a SpeakUp!
grievance mechanism and have established a Code of
Conduct, policies, rules and procedures incorporated in
the company’s Policy framework, in order to drive a
culture of good governance, consistency and functional
excellence. The values of good governance, sustainability
and teamwork adopted by the Board of Management are
incorporated in these documents. The Board of
Management believes these values contribute to a culture
focused on sustainable long-term value creation and
actively encourages these values through leading by
example.
A strong company culture fostering a solid and well-
embedded balance between performance and
organizational health is highly valued by the Board of
Management and Supervisory Board, and is fundamental
to AkzoNobel’s strategic approach. Our company culture
forms an important part of discussions involving internal
organizational changes and Human Resources strategy
updates, as well as any functional updates. Since 2018,
surveys have been conducted involving all employees,
covering a variety of focus areas, such as our wider
organizational health (see Employee engagement in the
Sustainability statements). The Executive Committee and
Supervisory Board regularly discuss the results of such
surveys, the targets and the actions taken to achieve
those targets.
We were involved in the Who’s That Girl research project, which has been
investigating Vermeer’s famous painting The Girl With the Pearl Earring. The
Mauritshuis in the Netherlands has been using advanced techniques to discover what
the artwork would have looked like when it was completed in 1665. Our paint experts
were brought in to test how much the painting’s color and gloss have faded over the
centuries.
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CORPORATE GOVERNANCE STATEMENT
For more information on our culture, please refer to the
Sustainability statements and the Integrity and compliance
management chapter.
Sustainability
The Executive Committee is responsible for incorporating
the sustainability agenda into the company's strategic
approach and monitoring the performance of each
business through the Operational Control Cycle. Given the
focus on sustainability, overall ownership of sustainability is
with the CEO.
Progress regarding sustainability objectives, development,
target setting and implementation is reviewed on a
quarterly basis by the Executive Committee and the
Supervisory Board. Regular deep dives on specific
sustainability topics are carried out to ensure there's
appropriate expertise in the Executive Committee and
Supervisory Board to manage and oversee sustainability-
related matters, and to assess any associated material
impacts, risks and opportunities. Several bodies report via
the Director of Sustainability to the Executive Committee
and Supervisory Board, including the Raw Material
Sustainability Group (RMSG) and the CSRD Steering
Committee. Further details are included in the
Sustainability statements.
The latest exhibition from the AkzoNobel Art Foundation, entitled eARTh – A
Collective Landscape, was opened at our head office in Amsterdam, the Netherlands.
Featuring work from 41 established and up-and-coming artists, it offers an
opportunity for visitors to emotionally engage with our natural surroundings to better
understand the challenges we’re all facing.
AkzoNobel Report 2023
The Audit Committee takes an active role in assessing the
quality and reliability of sustainability reporting and receives
bi-annual updates from the CSRD Steering Committee.
External auditor PwC has been engaged to perform a
limited assurance engagement on specific indicators
included in the Sustainability statements. Their report can
be found in the Financial information.
Supervisory Board
This section provides an overview of the responsibilities
and governance of the Supervisory Board. For an
understanding of the activities of the Supervisory Board
over the past year, refer to the Statement of the Chair of
the Supervisory Board and the Report of the Supervisory
Board.
Committees
Integrity and Compliance governance
committees
The Executive Committee is responsible for maintaining a
culture of integrity and ensuring an effective Integrity and
Compliance program and framework and has delegated
part of the responsibilities to specific committees. The
Supervisory Board’s Audit Committee oversees this
responsibility. More details on the Integrity and
Compliance governance committees can be found on
page 82.
Executive Pensions Committee
The Executive Pensions Committee oversees the general
pension policies of AkzoNobel’s various pension plans and
their financial consequences for the company. The
committee is chaired by the CFO and includes the Chief
Human Resources Officer and senior executives with a
background in corporate law, treasury, pensions and
rewards.
Disclosure Committee
The Board of Management has established a Disclosure
Committee, which consists of senior executives with a
background in corporate law, finance and investor
relations. The task of the Disclosure Committee is to
establish and maintain disclosure controls and procedures,
and to advise the CEO, CFO and General Counsel on the
accurate and timely disclosure of material financial and
non-financial information.
The responsibility of the Supervisory Board is to supervise
the policies adopted by the Board of Management and the
Executive Committee and to oversee the general conduct
of the business of the company. In practice, this means
supervising:
•
•
The corporate strategy
The achievement of the company’s operational and
financial objectives
The design and effectiveness of internal risk
management and control systems
The main financial parameters, compliance with
applicable laws and regulations and risk factors
•
•
The Supervisory Board advises the Board of Management
and Executive Committee, while taking into account the
interests of the company and its stakeholders. Major
investments, acquisitions and functional initiatives are
subject to Supervisory Board approval.
The Supervisory Board is governed by its Rules of
Procedure (available on our website). The Rules of
Procedure include the profile and charters of the
Committees, which set out the tasks and responsibilities of
the Supervisory Board, and its operational processes.
Composition
In compliance with the Dutch Civil Code, the Supervisory
Board has a balanced composition reflecting the nature
and variety of the company’s businesses, their
international spread and expertise in fields such as finance,
economics, societal, environmental and legal aspects of
business, government and public administration.
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CORPORATE GOVERNANCE STATEMENT
The Supervisory Board maintains a skills matrix, which
provides an overview of the skills and experience of the
individual members. The skills matrix can be found on
page 70.
In addition, in accordance with the Code, a policy on
diversity and inclusion has been adopted for the
composition of the Supervisory Board in the DE&I Policy
for the executive level, Board of Management and
Supervisory Board. The objective of this policy is to ensure
a balanced composition, taking account of nationality, age,
gender, education and work background. For 2023, there
are no divergences to report. With five male and three
female members, the Supervisory Board complied with the
requirements of the Dutch Gender Diversity Bill.
Supervisory Board
37.5%
Female
62.5%
Male
Tenure in years in %
AkzoNobel Report 2023
A 0-4
B 5-8
C 9-10
37.5
37.5
25
When nominating and selecting new candidates for the
Supervisory Board, we take into account the Supervisory
Board profile and skills matrix, the requirements of the Act
on Management and Supervision, the principles and
provisions of the Code, as well as the DE&I Policy for the
executive level, Board of Management and Supervisory
Board.
Appointment
Supervisory Board members are nominated, appointed
and dismissed in accordance with procedures identical to
those previously outlined for the Board of Management
members. In accordance with the Code, Supervisory
Board members are eligible for re-election once for a
period not exceeding four years. Members may be re-
elected a second time for a period of two years. This
period may be extended by two years at the most. In the
event of a reappointment after an eight-year period,
reasons must be given in the Report of the Supervisory
Board. Terms of appointment are based on a
reappointment scheme, available on our website. In 2023,
one appointment and two reappointments to the
Supervisory Board were proposed to, and approved by,
the AGM held on April 21, 2023.
Induction and training
Following appointment to the Supervisory Board, new
members receive a comprehensive induction tailored to
their individual needs. This includes extensive briefings
about all major business and functional aspects of the
company and its corporate governance and compliance
requirements. The induction includes meetings with the
CEO, CFO, all other Executive Committee members and
relevant members of senior management, as well as site
visits. This enables new Supervisory Board members to
quickly build up an understanding of AkzoNobel’s
businesses and strategy, as well as the key risks and
issues the company faces. In addition, the Chair ensures
the Supervisory Board is provided with regular updates,
attends business unit deep dives and ensures that the
Supervisory Board undertakes training, for example in the
area of compliance and ethics and sustainability
(reporting). To the extent required, separate training
sessions outside of regular Supervisory Board meetings
can be arranged by the company.
Conflict of interest
Supervisory Board members may not participate in the
discussions and decision-making on a subject or
transaction in relation to which they have a conflict of
interest with the company. Decisions to enter into
transactions under which Supervisory Board members
have conflicts of interest that are of material significance to
the company, and to the relevant Supervisory Board
member, require the approval of the Supervisory Board.
Any such decisions will be recorded in the annual report
for the relevant year, with reference to the conflict of
interest and a declaration that the relevant best practice
provisions of the Code have been complied with. During
2023, no transactions were reported under which a
Supervisory Board member had a conflict of interest which
was of material significance to the company and to the
relevant member.
Remuneration of the Supervisory Board
Supervisory Board members receive a fixed annual
remuneration and attendance fee, which is determined by
the AGM. According to the Code, it is not possible for
members to be remunerated in shares. The current
Remuneration Policy for the Supervisory Board was last
amended in full following approval by the AGM in 2021.
More information on the remuneration of Supervisory
Board members and the Remuneration Policy of the
Supervisory Board can be found in the Remuneration
report and Note 25 of the Consolidated financial
statements.
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CORPORATE GOVERNANCE STATEMENT
Supervisory Board Committees
The Supervisory Board has established three permanent
committees – the Audit Committee, Nomination
Committee and Remuneration Committee. Information on
the activities, composition and attendance of the
Supervisory Board members at the meetings of the
committees during the year is set out in the Report of the
Supervisory Board. Each committee has a charter
describing its role and responsibilities, as well as the
manner in which it discharges its duties and reports to the
full Supervisory Board. These charters are included in the
Rules of Procedure of the Supervisory Board. The
committees report on their deliberations and findings to
the full Supervisory Board.
Shareholders and the Annual General
Meeting
The AGM is an integral part of the governance of the
company and its system of checks and balances. The
AGM reviews the annual report and decides on the
adoption of the financial statements and the dividend
proposal, as well as the discharge and (re)appointment of
members of the Supervisory Board and Board of
Management. The AGM is convened by public notice and
the agenda, notes to the agenda and the procedure for
attendance and voting at the meeting are published in
advance and posted on our website. Matters proposed for
consideration, approval or adoption are tabled as separate
agenda items and explained in writing in advance of the
meeting.
These proposals include, where relevant:
•
Adoption of the financial statements
• Dividend proposal
• Discharge of members of the Supervisory Board and
•
Board of Management
(Re-)election of members of the Board of Management
and Supervisory Board
AkzoNobel Report 2023
Advisory vote on Remuneration report
•
• Other important matters, such as major acquisitions or
the sale or demerger of a substantial part of the
company, as required by law
Authorization of the Board of Management to issue
new shares
Authorization of the Board of Management to
repurchase shares
•
•
• Remuneration of Supervisory Board members
• Material changes to the Remuneration Policy of the
•
Board of Management
Amendments to the Articles of Association (for more
details, see art. 57 of the Articles of Association,
available on our website)
The company provides remote voting possibilities to its
shareholders. Holding shares in the company on the
record date determines the right to exercise voting rights
and other rights relating to the AGM. All resolutions are
made on the basis of the “one share, one vote” principle
(assuming an equal par value for each class of shares). All
resolutions are adopted by absolute majority, unless the
law or the company’s Articles of Association stipulate
otherwise. Holders of common shares in aggregate
representing at least 1% of the total issued capital, or,
according to the Official List of Euronext Amsterdam N.V.,
representing a value of at least €50 million, may submit
proposals for the AGM agenda. Such proposals must be
adequately substantiated and submitted in writing, or
electronically, to the company at least 60 calendar days in
advance of the meeting. Draft minutes of the AGM are
made available on our website within three months of the
meeting date. The final minutes are made available online
within six months of the meeting date.
Share classes
AkzoNobel has three classes of shares: common shares,
cumulative preferred shares and priority shares. Common
shares are traded on the Euronext Amsterdam stock
exchange. Common shares are also traded over-the-
counter on OTCQX in the US in the form of American
Depositary Receipts (each American Depositary Receipt
representing one-third of a common share). On December
31, 2023, a total of 170.6 million common shares and
48 priority shares had been issued. This includes shares
held in treasury which cannot be voted on and which are
not eligible for dividend. Shareholders owning 3% or more
of the issued capital and/or voting rights must report this
to the Dutch Authority for the Financial Markets (AFM) as
soon as the threshold is reached or exceeded. Relevant
reporting by shareholders can be found in the “Register of
substantial holdings and gross short positions” at
www.afm.nl
The majority of shares in AkzoNobel N.V. are included in a
global certificate and held through the system maintained
by the Dutch Central Securities Depository (Euroclear
Nederland). In the past, Akzo Nobel N.V. also issued
(physical) bearer share certificates (Bearer Certificates).
A limited number of Bearer Certificates have not yet been
surrendered to Akzo Nobel N.V., although holders of
Bearer Certificates are entitled to a corresponding number
of shares in Akzo Nobel N.V. It is noted that, as a result of
Dutch legislation which became effective as of July 2019,
the relevant shares were registered in the name of Akzo
Nobel N.V. by operation of law as per January 1, 2021.
Pursuant to this legislation, owners of Bearer Certificates
will continue to be entitled to a corresponding number of
shares in Akzo Nobel N.V. until January 2, 2026. On that
date, their entitlement will expire by operation of law.
Related information
For more details about AkzoNobel shares and
Bearer Certificates, contact Investor Relations:
investor.relations@akzonobel.com
The priority shares are held by the Foundation Akzo Nobel
(Stichting Akzo Nobel). The priority shares are limited in
transferability and profit entitlement (see Note F of the
Company financial statements). The Foundation’s Board
consists of AkzoNobel’s Supervisory Board members who
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CORPORATE GOVERNANCE STATEMENT
are not members of the Audit Committee. The Meeting of
Holders of Priority Shares has the nomination right for the
appointment of members of the Board of Management
and the Supervisory Board, as well as the right to approve
amendments to the Articles of Association of the
company.
No cumulative preferred shares have been issued to date.
Cumulative preferred shares merely have a financing
function, which means if necessary, and possible, they will
be issued at or near the prevailing quoted price for
common shares.
The AGM held on April 21, 2023, authorized the Board of
Management for a period of 18 months after that date or,
if earlier, until the date on which the AGM again renews the
authorization – subject to approval from the Supervisory
Board – to issue shares in the capital of the company free
from pre-emptive rights, up to a maximum of 10% of the
issued share capital. The Board of Management was also
given a mandate to acquire and to cancel held or acquired
common shares in the company’s share capital. The
maximum number of shares that the company will hold in
its own share capital at any time shall not exceed 10% of
its issued share capital.
Anti-takeover provisions and control
According to the Code, the company is required to
provide an overview of its actual or potential anti-takeover
measures, and to indicate in what circumstances it's
expected they may be used. The priority shares may be
considered to constitute a form of anti-takeover measure,
in relation to the right of the Meeting of Holders of Priority
Shares to make binding nominations for appointments to
the Board of Management and the Supervisory Board. The
Foundation Akzo Nobel has confirmed that it intends to
make use of such rights in exceptional circumstances only.
These circumstances include situations where, in the
opinion of the Board of the Foundation, the continuity of
the company’s management and policies is at stake.
AkzoNobel Report 2023
This may be the case if a public bid for the common
shares of the company has been announced, or has been
made, or the justified expectation exists that such a bid will
be made, without any agreement having been reached in
relation to such a bid with the company. The same shall
apply if one shareholder, or more shareholders acting in a
concerted way, hold a substantial percentage of the
issued common shares of the company without making an
offer. Or if, in the opinion of the Board of the Foundation
Akzo Nobel, the exercise of the voting rights by one
shareholder or more shareholders, acting in a concerted
way, is materially in conflict with the interests of the
company. In such cases, the Supervisory Board and the
Board of Management, in accordance with their statutory
responsibility, will evaluate all available options with a view
to serving the best interests of the company, its
shareholders and other stakeholders.
The Board of the Foundation Akzo Nobel has reserved the
right to make use of its binding nomination rights for the
appointment of members of the Supervisory Board and of
the Board of Management in such circumstances.
Although a deviation from provision 4.3.3 of the Code, the
Supervisory Board and the Board of Management are of
the opinion that these provisions will enhance the
continuity of the company’s management and policies. In
the event of a hostile takeover bid, or other action which
the Board of Management and Supervisory Board
consider adverse to the company’s interests, the two
Boards reserve the right to use all available powers
(including the right to invoke a response time in
accordance with provisions 4.1.6 and 4.1.7 of the Code),
while taking into account the relevant interests of the
company and its affiliate enterprises and stakeholders.
Auditors
The external auditor is appointed by the AGM on proposal
of the Supervisory Board. An annual evaluation of the
external auditor is reviewed by the Audit Committee and
reported on to the Supervisory Board. The external auditor
attends all meetings of the Audit Committee, and the
meeting of the Supervisory Board at which the financial
statements are approved. During these meetings, the
auditor discusses the outcome of the audit procedures
and the reflections thereof in the auditors’ report. In
particular, the key audit matters are highlighted. The
auditor receives the financial information and underlying
reports of the quarterly figures and can comment on and
respond to this information. The external auditor is present
at the AGM and shareholders may ask questions with
regard to the audit.
Auditor independence
The Audit Committee and Board of Management report
their dealings with the external auditor to the Supervisory
Board annually, and also discuss the external auditor’s
independence.
Other services
One area of particular focus in corporate governance is the
independence of the auditors. The Audit Committee has
been delegated direct responsibility for the compensation
and monitoring of the auditors and the services they
provide to the company. Pursuant to the Audit Profession
Act, the auditors are prohibited from providing the
company with services in the Netherlands other than
“audit services aimed at providing assurance concerning
the information supplied by the audited client for the
benefit of external users of this information and also for the
benefit of the Supervisory Board as referred to in the
reports mentioned”.
The company has taken the position that no additional
services may be provided by the external auditor and its
global network that do not meet these requirements,
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CORPORATE GOVERNANCE STATEMENT
unless local statutory requirements so dictate. In order to
anchor this in our procedures, the Supervisory Board
adopted the AkzoNobel Rules on External Auditor
Independence and Selection and the related AkzoNobeI
Procedure on Auditor Independence. The aforementioned
rules are available on our website.
Internal Audit
The Internal Audit function is mandated to provide the
Board of Management, Executive Committee and Audit
Committee with independent, objective assurance on the
adequacy of the design and operating effectiveness of the
Internal Control Framework described below. The Internal
Auditor reports to the Board of Management and has
direct access to the Audit Committee and its Chair. The
function performs its mandate based on a risk-based audit
plan, which is approved by the Board of Management and
the Audit Committee. It reports the audit findings quarterly
to the Board of Management, Executive Committee and
the Audit Committee, which culminates in an annual
assessment of the quality and effectiveness of the
company’s internal control systems.
Share dealing rules and rules on
disclosure control
the Dutch Authority for the Financial Markets (AFM). The
Board of Management, Executive Committee and
Supervisory Board members require authorization from the
General Counsel prior to carrying out any transactions in
respect of AkzoNobeI securities, even in a so-called “open
period”. In relevant cases, the General Counsel can
prohibit carrying out transactions in respect of other
companies’ securities. In addition, all employees are
subject to the AkzoNobeI Rules on Disclosure Control.
Internal controls and risk management
Internal controls
The company has adequate processes and procedures for
internal controls. The Board of Management and Executive
Committee have established several Risk, Control and
Compliance Committees, which are explained on page 82.
In 2023, we continued to invest in enhancing our Internal
Control Framework and processes, including further
leveraging system embedded and system enabled
controls, standard role design and segregation of duties
monitoring, helping us to prevent fraud and reputational
damage. An integrated Risk and Internal Control
department supports all businesses and functions in their
work.
In accordance with Dutch Iaw and regulations (including
the European Market Abuse Regulation), the company
maintains insider lists and exercises controls around the
dissemination and disclosure of potentially price sensitive
information.
Risk management
Our risk management system is explained in more detail in
the next chapter. Reference is made to the Statement of
the Board of Management relating to internal risk
management and control systems.
All employees and the members of the Board of
Management, Executive Committee and Supervisory
Board, are subject to the AkzoNobel Share Dealing Rules,
which limit their opportunities to trade in AkzoNobel
securities. Transactions in AkzoNobeI shares carried out
by Board of Management, Executive Committee and
Supervisory Board members (including their closely
associated persons) are, as and when required, notified to
AkzoNobel Report 2023
Our Coral brand in Brazil partnered with Mattel to produce a real-life Barbie color range. The
special collection, which featured 14 vibrant colors, was launched in stores in June to tie in
with the release of the Barbie movie.
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79
RISK MANAGEMENT
Internal controls
appropriate risk management and control systems (see
Statement of the Board of Management).
an evolving risk landscape, which includes short, medium
and longer term challenges.
Refer to the previous page for our processes and
procedures regarding internal control.
The AkzoNobel Internal Control Framework
The symbols alongside the risk descriptions that follow
represent management’s assessment of risk development,
compared with 2022. During the assessment, both our
internal and external environment were taken into account.
For information related to financial risk management, see
Note 26 of the Consolidated financial statements.
Risk management framework
Our risk management framework is in line with the
Enterprise Risk Management – Integrated Framework of
COSO and the Corporate Governance Code. It’s an
embedded, company-wide activity, focused on the areas
of main risk exposure and provides reasonable assurance
that our business objectives can be achieved and our
obligations to customers, shareholders, employees and
society can be met. The process consists of risk appetite
setting by the Executive Committee to serve as input for
our strategy and general risk management approach,
followed by structured risk assessments applying a top-
down and bottom-up approach, and the management and
monitoring of identified risks. The risk management
framework is discussed twice a year with the Supervisory
Board. For more information on our risk management
framework, visit the Risk management section on our
website.
Risk management vision and
governance
Risk management in 2023
Doing business involves taking risks. We strive to be a
successful and respected company and seek to take a
balanced risk approach. Risk management is an essential
element of our corporate governance and strategy
development. We continuously strive to foster a high
awareness of business risks and internal control to provide
transparency in our processes and operations. AkzoNobel
complies with the risk management requirements of the
Dutch Corporate Governance Code 2022. The Board of
Management and Executive Committee are responsible for
managing the risks associated with our strategic objectives
and the establishment and adequate functioning of
AkzoNobel Report 2023
AkzoNobel’s risk appetite differs depending on the type of
risk. We believe we must operate within the dynamics of
the paints and coatings industry and take the risks needed
to ensure our relevance in the market. At the same time,
topics related to our core values and company purpose
require a different risk appetite.
During 2023, we held a significant number of enterprise
risk workshops across the organization, as well as project,
transition and fraud risk workshops. Risks were identified
by responsible management teams and functional experts,
followed by the definition of adequate mitigating actions.
We consider risk assessment and mitigation to be a
continuous process, carried out against the background of
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RISK MANAGEMENT
Mitigating actions
• Balanced geographic presence with revenue
generated from all regions and continued investment
focus on higher growth markets to optimize
geographic spread
• Continued focus on operational cost, complexity
reduction, margin management and commercial and
procurement excellence
• Continue to drive business unit strategic mandates
underpinning the company strategy
Integrated Business Planning maturity =
The risk that we don't reach the required service levels
due to inadequate end-to-end planning processes and
supply chain infrastructure, leading to loss of existing
business and inability to win new business.
Mitigating actions
•
Focus on complexity reduction and improving
efficiency of the product portfolio and supply chain
Increase agility and velocity in the end-to-end process
through simplification, cross-company initiatives,
digitalization and data-driven modeling
Stronger performance management via aligned sets of
lagging and leading KPIs, and mature IBP governance
•
•
Supply shortages 6
The risk of supply shortages of key raw materials,
packaging and/or spare parts, resulting in production
interruptions, additional cost and muted organic growth.
Mitigating actions
• Maintain and further improve strong industry and
market intelligence analysis of suppliers and raw
material markets
• Drive supply chain network design, end-to-end, from
•
supplier to end customer
Assess climate change impact and develop mitigation
plans for own operations, key suppliers’ locations and
logistics (see the Sustainability statements)
Attract and retain talent 6
The risk that we're unable to attract and/or retain talent to
ensure a fit-for-future workforce with the right capabilities,
leading to a threat to the organization's competitive
advantage and the ability to achieve our strategic
objectives.
Mitigating actions
•
Strengthen AkzoNobel’s value proposition, based on
our commitment to employee growth and the
company purpose
Focus on talent management (talent attraction,
development and retention) in several ongoing
programs to ensure adequate capabilities
•
• Continuation of engagement surveys, employee well-
being programs and culture and change programs to
support engagement
Geo-political instability 5
The risk that increasing geo-political turbulence results in
declining customer and industry confidence and a decline
in key markets and significant losses to our sales and
profitability.
Mitigating actions
• Balanced geographic presence with revenue
generated from all regions and continued investment
focus on higher growth markets to optimize
geographic spread
• Geo-political assessment as part of investment
decisions and medium-term operational planning
• Continue to drive business unit strategic mandates
underpinning the company strategy
• Driving demand planning through Integrated Business
Planning
• Diversifying our supply chain and managing
redundancy
Cybersecurity =
The risk of significant business disruption and/or
inadequate recovery following a cybersecurity attack,
leading to potential loss of sensitive information, intellectual
property, cash, or reputation damage.
Mitigating actions
• Continually reinforcing a cybersecurity awareness and
•
•
•
•
culture within the entire organization
Strengthening protection, detection and response
capabilities on both IT and OT (operational technology)
domains by leveraging new technologies
Improving the capacity for reducing the impact from
sophisticated cyber attacks and quickly recovering
from them
Improving our capacity for assessing cyber risks in
critical domains and monitoring their remediation
Increasing the level and quality of partnerships with
public and private institutions for improving the level of
security of our business ecosystem
Macro-economic crisis =
The risk of a prolonged macro-economic downturn,
leading to local currency devaluation, high inflation,
customer destocking and a reduction in volume and
margin.
AkzoNobel Report 2023
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RISK MANAGEMENT
Pricing and margin management6
The risk of lower margins resulting from higher raw
material prices, inflation and increased competitive
pressure combined with insufficient margin management.
Business continuity =
The risk of being unable to respond adequately to a
significant business interruption, leading to financial and
reputational damage.
Mitigating actions
• More data-driven approach, based on value pricing
•
Investment in sales capability and focus on
commercial excellence
• Continue to closely monitor raw material prices and
availability
Ability to execute 5
The risk of misalignment between the business and
functions and short term versus long term, leading to
inability to support and drive the business agenda and
growth plans, resulting in not delivering the set targets.
Mitigating actions
• Global process organization in place to increase
common competencies and align on key end-to-end
process improvements, as well as increased
collaboration between relevant functions in Integrated
Business Planning
Leadership team changed, flattening the organization,
increasing business representation in the Executive
Committee and consolidating the Commercial and
Strategic functions
Improving our industrial operations by focusing on
reducing complexity, improving capacity utilization and
investing in the modernization of our sites
•
•
Mitigating actions
• Continue to enhance our business continuity
processes and plans, supported by taking Integrated
Business Planning to a next maturity level and
increasing cross-functional and business collaboration
Product portfolio =
The risk of lacking a fit-for-purpose product portfolio,
leading to a cost base that's too high and an inability to
compete in the market.
Mitigating actions
• Continuing to reduce our product portfolio complexity
• Constantly reengineering our products
•
Enhancement of our product lifecycle and product
change management
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
Risk assessed to decrease.
5
=
6
AkzoNobel Report 2023
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INTEGRITY AND COMPLIANCE MANAGEMENT
We’re committed to leading with
integrity in our industry. It’s one of our
three core values for doing business.
We continue to further advance and
expand our Integrity and Compliance
program to help ensure compliance
with laws and regulations, empower
and enable our employees to make fair
and honest decisions and bring
integrity to life.
Below is a summary of the 2023 priorities and key
activities, and the outcomes thereof, as required pursuant
to the Dutch Decree on the publication of non-financial
information.
Governance and organization
The Executive Committee is responsible for maintaining a
culture of integrity and ensuring an effective Integrity and
Compliance program and control framework. The
Supervisory Board’s Audit Committee oversees this
responsibility. The Executive Committee has delegated
certain responsibilities to the following working committees
and Integrity and Compliance team:
Integrity and Compliance governance
committees
The Integrity and Compliance governance committees are
at the core of our Integrity and Compliance governance
model. We assess the need for committees depending on
organizational changes, changes in the risk profile of
business units, and regulatory and legislative changes. In
2023, we had committees in place in all eight business
units, the Integrated Supply Chain organization and certain
specific countries. The committees consist of business unit
AkzoNobel Report 2023
leadership and key corporate function leaders, including
the Integrity and Compliance managers. The committees
drive the operationalization of the Integrity and Compliance
(I&C) program into the organization, with a strong focus on
prevention. The committees discuss trends, identify,
prioritize and address risks and share learnings from
investigations to drive continuous improvement. In 2023,
each business unit committee conducted an I&C risk
assessment. For more information on the I&C risk
assessment, see the following Risk management
paragraph. The committees meet at least on a quarterly
basis.
Integrity and Compliance SpeakUp!
Committee
This committee reviews investigations into SpeakUp!
reports involving alleged violations of our Code of Conduct
and applicable laws. The committee also decides on
discipline and control improvement actions, as well as
monitoring and responding to any trends identified in
investigations. Cases are generally decided by the
SpeakUp! Committee, with certain limited exceptions for:
(1) Certain regulatory matters where subject matter
expertise is needed, which go to the General Counsel;
(2) Certain lower risk cases, which may be decided by the
leader of the business unit or function in whose
organization the alleged violation occurred. The latter
cases are reviewed by the SpeakUp! Committee. The
centrally established Integrity and Compliance SpeakUp!
Committee ensures transparency and consistency of
disciplinary actions throughout the organization.
In 2023, there were no individual matters or disciplinary
actions discussed with the committee that would warrant
separate disclosure in the annual report. Should there be
material compliance matters, or material internal control
weaknesses or improvements in the future, these will be
addressed through the Risk, Control and Compliance
Committees (see next column) and discussed with the
Audit Committee and external auditor, and where
appropriate disclosed in accordance with the applicable
legal requirements.
Risk, Control and Compliance
Committees (RCC)
The RCCs are responsible for supervising the effectiveness
of the control environment and reviewing weaknesses in
this environment, enabling more robust prioritization and
progress. There are eight business unit RCCs and seven
functional RCCs, in addition to a Group RCC. They each
met quarterly in 2023.
Privacy Committee
Responsible for supervising the company’s privacy
framework and driving the further improvement of the
Privacy program. For more information on our key privacy
activities, see the following Privacy program paragraph.
Integrity and Compliance team
The day-to-day management of our Integrity and
Compliance program is delegated to the Integrity and
Compliance team – which is led by the Director of Integrity
and Compliance, who reports to the General Counsel. The
team includes experts in integrity and compliance program
design, legal experts in the field of competition law, anti-
bribery and anti-corruption and data privacy, as well as our
Integrity and Compliance managers in all regions driving
the implementation and further tailoring of the program to
address local risks.
To ensure the company maintains and strengthens its
culture of integrity, the Integrity and Compliance team –
together with various other functions and stakeholders
across the organization – focuses its efforts on the
following key areas:
• Help leaders set a strong tone at the top and lead by
example
• Drive awareness and ownership of all employees
through effective policy management, training and
communication
• Design and implement effective controls
• Risk management
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INTEGRITY AND COMPLIANCE MANAGEMENT
•
Investigations of SpeakUp! matters with a focus on
identifying control action items and sharing lessons
learned
• Driving continuous improvement
The regional Integrity and Compliance managers
contribute to further strengthening the culture of integrity.
This includes identifying and addressing local risks and
cooperating with the business and functional teams to
tailor the program to local risks and follow up on internal
audit findings and SpeakUp! cases. In 2023, the heads of
Integrity and Compliance, Internal Control and Internal
Audit met at least quarterly to discuss findings and trends,
and to align actions. The Director of Integrity and
Compliance also met at least quarterly with the Human
Rights team and Export Control and Sanctions team to
discuss the priorities in these areas and the impact of geo-
political developments.
Risk management
The business unit Integrity and Compliance governance
committees play a key role in the Integrity and Compliance
risk assessments, which are led by the Integrity and
Compliance team. A new Integrity and Compliance risk
assessment process was rolled out in 2023, which
involved asking the business unit Integrity and Compliance
governance committees to identify and prioritize key risks
and define action plans and owners to mitigate these risks.
Each committee has approved its business unit specific
risk remediation plan, and the outcome of all Integrity and
Compliance risk assessments serves as the basis to
identify the priorities for 2024 and onwards.
AkzoNobel Report 2023
Policy management
Competition law program
All AkzoNobel policies, rules and procedures are available
on the Policy Portal. In 2023, a backend tool was
developed to automate and standardize document
lifecycle management, including revisions to documents
and archiving of previous versions of documents.
Communication
We have further strengthened our communication program
by launching various new initiatives to reach more
colleagues and raise greater awareness. Although no
major risks or issues were identified in the SpeakUp!
cases, to continuously ensure a strong tone from the top
and drive improvement, we launched a series of SpeakUp!
videos. They are short films in which senior leaders share
lessons learned from SpeakUp! cases and offer guidance
on how to prevent future misconduct. In addition, we
continued sharing ethical dilemmas and SpeakUp!
Insights, a quarterly case-sharing program through which
we ask our leaders to discuss the learnings with their
teams and encourage speaking up, along with various
campaigns dedicated to particular topics. In 2023, we
developed an interactive online game (the Integrity Fun
Fair) for our Integrity Day campaign, to refresh people’s
memories about key integrity and compliance risks in the
areas of competition law, data privacy, anti-bribery and
anti-corruption.
Training and education
In addition to online training, targeted audience training on
key integrity and compliance topics/risks continued to be
delivered as part of the mandatory Integrity and
Compliance training curriculum. Also in 2023, a new Code
of Conduct training was launched with targeted versions
for both online and offline workers.
Compliance with competition law and competing fairly
remains a top priority for our company. We have
undertaken a series of initiatives aimed at fostering a
culture of competition law compliance throughout the
organization. A particular focus has been conducting
training and creating materials relating to risks around
information exchange and careful communications.
Additionally, we’ve strengthened our dedicated
competition law team responsible for providing support to
the broader legal function and business. They’re tasked
with actively identifying potential risks and areas for
improvement, and working on prevention and mitigation
strategies. Furthermore, we’ve maintained an open
channel for reporting and addressing potential concerns.
We’ve conducted assessments of proposed strategic
initiatives and commercial developments, with a particular
emphasis on key markets, ensuring that they align with
competition laws. The competition law aspects of M&A
activity, and subsequent integrations, continue to be a
focus area.
Privacy program
In 2023, we focused on further strengthening awareness
on data privacy with those teams dealing with personal
data on a regular basis. We also introduced two targeted
privacy e-learnings: one for HR, focusing on employee
personal data, and another for Sales and Marketing,
emphasizing customer data handling. As part of the further
standardization and automation of our data privacy
program, we continued the global roll-out of our advanced
and partly automated centralized process for managing
customer data subject requests.
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Anti-bribery and anti-corruption
program
Monitoring
During the year, we launched a new gifts and hospitality
e-learning, along with new gift and conflict of interest
registration tools (including a pre-approval workflow).
Going forward, we’ll add more specific controls for other
anti-bribery and anti-corruption areas, such as donations,
sponsorships and hospitality. This will help us to
strengthen our controls, monitor compliance with our
policies, rules and procedures and enable data gathering,
analysis and reporting.
Third-party risk management (TPRM)
program
Following the TPRM program re-design in 2022, we
acquired a new TPRM platform, with integrated TPRM
screening software and enhanced due diligence reporting
capability. We focused on implementation activities in
2023, aiming for a global roll-out of the revamped TPRM
program in 2024. We managed to create a highly
automated and efficient risk-based end-to-end TPRM
program, with critical interface to the CRM (Customer
Relationship Management). At the end of 2023, we kicked
off a pilot to test the program design, target operating
model and monitor volumes. In addition, we applied an
interim third-party screening process targeting the highest
risk partners across the company. To increase awareness
on the topic of TPRM, a chapter has also been included in
our Code of Conduct training.
We have several processes to monitor compliance with
our rules and procedures by employees and business
partners. Employees are informed about this through the
Employee Privacy Statement. Managers are also required
to self-assess and confirm compliance with company key
controls as part of the internal control self-assessment.
From a competition law perspective, we also run amnesty
programs for newly acquired businesses as part of the
integration process into the wider group.
The Internal Audit function performs numerous audits on
our operations. Their audit plan is risk-based and takes
account of prior compliance and internal control findings.
Internal audits were also held or covered specific risks – at
the request of the Integrity and Compliance function – to
validate compliance with our rules and procedures in
certain units, or on certain risk areas.
Grievance and investigation
Our SpeakUp! grievance mechanism offers employees and
third parties a means to raise allegations relating to
compliance with our Code of Conduct and violations of
applicable laws and regulations.
Our dedicated investigation team follows an investigation
protocol which adheres to strict principles of
confidentiality, respect for anonymity, non-retaliation,
objectivity and the right to be heard. The investigation
program has been updated to reflect the EU Whistleblower
Directive, as transposed into national laws. In 2023, the
total number of reports across all channels increased
slightly. This was driven by several factors, including
increased communication on the SpeakUp! process,
increased management reporting of alleged violations and
use of the system to report concerns or general enquiries
unrelated to the Code of Conduct, which are referred to
the appropriate subject matter expert. All reports and
alerts led to 39 dismissals, along with various other
disciplinary measures and control improvements,
confirming the value of the company’s grievance
framework.
Reporting
During 2023, the Director of Integrity and Compliance
reported every four months to the Executive Committee
and the Audit Committee of the Supervisory Board on
material developments of the Integrity and Compliance
program. Material investigation matters, if any, are
discussed with our external auditor on a quarterly basis.
There were no individual matters or disciplinary actions
discussed with the Integrity and Compliance SpeakUp!
Committee that would warrant separate disclosure in the
annual report. Should there be material compliance
matters or material internal control weaknesses or
improvements in the future, these will be addressed
through the RCCs and discussed with the Audit
Committee and external auditor and, where appropriate,
disclosed in accordance with the applicable legal
requirements.
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INTEGRITY AND COMPLIANCE MANAGEMENT
SpeakUp! reports
Total reports and alleged violations
Integrity
Safety
Sustainability
Dismissals resulting from SpeakUp! reports
Conclusions SpeakUp! reports:
Substantiated
Unsubstantiated
Other (e.g. referred)
2021
2022
2023
2023 Grupo Orbis
305
142
24
139
19
69
66
112
350
140
28
182
25
101
83
140
426
174
40
212
39
132
127
187
19
7
0
12
3
8
9
0
Grupo Orbis cases are not reported through our SpeakUp! system and are not included in the AkzoNobel figures noted above, but
are reported separately for 2023. Grupo Orbis cases are reported to AkzoNobel on a quarterly basis and material cases, if any, will be
escalated. To date, no material cases have been reported.
Around 75 schools in an area of Türkiye devastated by the 2023
earthquakes are being refurbished as part of a major project launched
by our Marshall brand. Located in Antakya – a municipality and district
of Hatay Province – around 60,000 liters of paint will be used on both
the interior and exterior of the schools, which will benefit around 8,000
students. Up to 100 community members will be trained to help carry
out the work, with 300 registered painters and ten AkzoNobel
volunteers also lined up to take part.
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REMUNERATION REPORT
Letter from the Chair of the Remuneration
Committee
Dear stakeholders
On behalf of the Remuneration Committee, I'm pleased to
introduce AkzoNobel's 2023 Remuneration report. In this
report, the company outlines the implementation of its
remuneration policies in 2023. The 2023 Remuneration
report will be subject to an advisory vote at our 2024
AGM.
Our business context in 2023
In response to the challenges posed by an unpredictable
macro-economic landscape, AkzoNobel outlined a set of
strategic priorities designed to guide with resilience and
adaptability.
Overall, the company did well in 2023 and is making good
strides forward, with stabilizing volumes and profits
rebounding positively. This was mainly driven by resilient
pricing and the first effects of raw material deflation. These
developments offset lower demand in some of our
markets and adverse currency exchange effects.
An industrial excellence plan has been launched, which is
aimed at reducing complexity, enhancing productivity and
optimizing our network through the investment and
modernization of our anchor sites. We recognize there’s
significant value to be gained through improving our
industrial processes and this plan is a key long-term
strategic priority for the company.
In order to better understand our opportunities, a review of
AkzoNobel's portfolio was carried out. Following this
review, the company moved decisively to strengthen the
Decorative Paints business in China through the
AkzoNobel Report 2023
acquisition of the Huarun business. Although we mutually
agreed with Kansai Paint not to proceed with our intended
acquisition of its paints and coatings activities in Africa,
AkzoNobel remains committed to its strong businesses
and leading brands in Africa. This will also bring the
company's debt reduction targets forward, which will help
to resume a normative capital allocation.
AkzoNobel also presented a comprehensive roadmap for
its focus products, outlining strategic initiatives for each.
These included acceleration plans for technology
development and the launch of innovative and sustainable
products, such as internal coatings for beverage cans that
are free of intentionally added bisphenols, low-cure
powder coatings and biocide-free antifoulings.
In the second half of the year, the company launched a
new comprehensive employee engagement survey,
underlining its commitment to understand and improve
employee satisfaction and engagement. With a
participation rate of 89% and a level of engagement well
above the average of the companies in the benchmark,
AkzoNobel put in place a basis to ensure continuous
improvement for the business.
became clear there was no strong support for introducing
retention measures. The Remuneration Committee took
that feedback under advisement and decided not to award
retention-related compensation in 2023, nor do we intend
to in 2024.
Remuneration report disclosure
Following the ongoing stakeholder dialogs, we
implemented several changes in our 2022 Remuneration
report to improve disclosure on performance outcomes
and Remuneration Committee decision-making.
Further changes have been introduced in this year’s
disclosures to improve the transparency and readability of
the 2023 Remuneration report. These changes include
using a new reporting format, providing additional context
on Remuneration Committee decisions made, structuring
the use of tabular and textual information and using more
visuals. We've also have changed our long-term incentive
(LTI) section in accordance with the vesting of the
2021-2023 LTI Plan. This is the first award for which the
updated performance metrics derived from the company's
strategic plan were in place.
Our stakeholder engagement
Decisions made on remuneration
The company is pleased that the 2022 Remuneration
report received a positive advisory vote at the 2023 AGM,
with a majority vote of 92.74%.
2023 AGM stakeholder engagement
AkzoNobel engaged with various stakeholders in
preparation for the 2023 AGM. These conversations
mainly focused on concerns raised by several
shareholders concerning continuity of leadership and, in
particular, with regard to the retention of the CFO. While
the importance of continuity of leadership was recognized
by our stakeholders, during these conversations it also
Board of Management
The 2023 remuneration outcomes for the CEO and CFO
are determined in accordance with the Remuneration
Policy for the Board of Management, which was last
amended in full following approval by the AGM in 2021,
and last updated at the AGM in 2022.
In 2023, the CEO, Greg Poux-Guillaume, earned a base
salary of €1,225,000. As per January 1, 2023, the CFO,
Maarten de Vries, received a base salary of €749,600. To
ensure that the salaries of the members of the Board of
Management were still at the market median level of our
peer group, the Remuneration Committee performed a
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REMUNERATION REPORT
accordance with recent discussions with our shareholders,
AkzoNobel intends to remove revenue growth as a metric
for LTI. This metric uses a calculated competitive
benchmark based on our competitors' limited disclosures.
Lack of market information forces us to make certain
assumptions to render competitors' information
comparable, making the KPI less objective and less
reliable. While growth remains a priority, it's captured in
the absolute EBITDA metric, which remains. Should
shareholders approve the proposed amendment, vesting
of the conditional grant will be linked to adjusted EBITDA
(33%), ROI (33%) and ESG (34%), increasing the
importance of ESG as a confirmation of our commitment
to our sustainability targets.
The Remuneration Committee carried out a benchmark in
2023 on the Supervisory Board remuneration levels. For
comparability in board structure and responsibilities,
remuneration levels were only compared with those
companies in the peer group with a two-tier board. The
benchmark used for this exercise does not include
American companies, but Dutch and European companies
only. Following the outcome of this review, AkzoNobel
intends to submit a proposal to increase the annual
retainer and committee fees of the Supervisory Board
members at the 2024 AGM. The proposed fees take into
consideration that the remuneration levels for the
Supervisory Board were last amended in 2021.
No further changes are envisioned for both the Board of
Management and Supervisory Board remuneration
policies. An overview of the remuneration in 2024 is
included in the Remuneration Policy for 2024 section.
Dick Sluimers
Chair of the Remuneration Committee
broader review of the base salaries. This review is carried
out once every three years, the last time being in 2020. As
per May 1, 2023, the CFO's base salary was increased to
€830,000, to bring his compensation in line with the
market. Following this increase, the CFO's salary is in line
with the market median of our peer group and therefore in
accordance with the principles of our Remuneration Policy
for the Board of Management. The CEO's salary did not
require an increase in 2023 as the review confirmed that it
was in line with the market median of the peer group.
In 2023, the achievement on the short-term incentive
metrics was above target for both financial objectives. The
non-financial objectives for the members of the Board of
Management were also evaluated above target on
average, resulting in an overall above target pay-out of
126.48%. More details can be found in the section on
short-term incentives.
Vesting under the 2021-2023 LTI Plan was limited to the
performance on revenue growth and Environmental, Social
and Governance (ESG) metrics, with details provided in
the section on long-term incentives.
Supervisory Board
The 2023 remuneration outcomes for Supervisory Board
members are determined in accordance with the
Remuneration Policy for the Supervisory Board, which was
last amended in full following approval by the AGM in
2021. No adjustments were made during the year, hence
the application was in line with previous years.
Implementation of our remuneration
policies in 2024
AkzoNobel will submit a proposal to change the LTI
performance measures and their weighting for
shareholders to approve at our 2024 AGM. Aligning with
our recently announced mid-term ambitions, and in
AkzoNobel Report 2023
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REMUNERATION REPORT
Remuneration at a glance – 2023
Base salary
Short-term incentive
Long-term incentive
Total pay
Greg Poux-
Guillaume
€1,225,000
STI pay-out as % of target
Vesting % of LTI award
In €1,000
STI
Adjusted OPI
FCF
Personal
LTI
Adjusted
EBITDA
ROI
Revenue growth
0%
25% 50% 75% 100% 125% 150%
ESG
Investment of 50% net STI proceeds
0%
25% 50% 75% 100% 125% 150%
€4,935
37%
31%
32%
€2,774
34%
29%
37%
Both the CEO and the CFO have chosen to invest an additional 25% of
net STI proceeds in the Share Matching Plan. Total investment of net STI
proceeds equals 50% for both.
Vesting applies only to the CFO, as the CEO joined the Board of
Management on November 1, 2022, and was therefore not eligible for
the vesting of shares awarded in 2021.
Total actual remuneration reflects full-year 2023 actual remuneration as
reported in the total remuneration table, whereby multi-year variable is on
the basis of IFRS 2 expenses.
Maarten de
Vries
€830,000
AkzoNobel Report 2023
Total actual remunerationFixed remunerationOne-year variableMulti-year variableCEOCFO€0€1,000€2,000€3,000€4,000€5,000€6,000€7,000
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REMUNERATION REPORT
Policy at a glance – Board of Management
The Remuneration Policy for the Board of Management is designed to incentivize the Board of Management to achieve the company’s objectives while considering market competitive
standards, the ratio between fixed and variable pay, the perspective of shareholders and other key stakeholders, and environmental, social and governance (ESG) related contributions of the
company.
Purpose
Design and link to strategy
Value
Total direct compensation
Is the basis for benchmark efforts (i.e. the reference to
the labor market peer group).
Base salary and variable income. Variable income concerns the performance-related short-term incentive (STI), the
long-term incentive (LTI) and the Share-Matching Plan. In addition, Board of Management members are entitled to
certain benefits.
Value of each respective item is specified in more detail
below.
Aims to provide a fair and competitive basis for the total pay level to attract high caliber leaders
In-depth benchmark at least every three years
Remuneration increases above the median market level are reserved for Board of Management members who
consistently outperform their targets
•
•
•
Annualized amounts
CEO: €1,225,000
CFO: €830,000*
The Supervisory Board sets strategically important operational targets for the respective performance year
and determines the extent to which they have been achieved
By ensuring that sustainable long-term value creation is properly reflected in stretched yet achievable targets,
the realization of strategic business objectives is addressed
For on-target STI, 70% is linked to financial objectives and 30% is related to quantifiable non-financial
objectives
Performance shares are awarded every year, to be converted into shares upon realization of pre-defined
targets, observing a three-year vesting period. Performance is measured over three financial years, starting
with the year of grant
Performance targets are based on company strategy, driving sustainable long-term value creation. 80% of LTI
targets are linked to financial goals and 20% are linked to environmental, social and governance (ESG) goals
An additional two-year holding period after vesting applies
Members of the Board of Management are expected to build up a shareholding in the company; the minimum
shareholding requirement must be accrued in five years
Considered are shares privately purchased and vested shares granted under AkzoNobel share-based
compensation plans
The Share-Matching Plan awards shares to Board of Management members for shares they have invested in
from their STI proceeds and held over a three-year period
• When they retain these shares for three years, the company will match such shares one on one, subject to
continued employment
•
•
•
A company paid contribution, based on age, to allow participation in a private pension plan, as applicable to
Netherlands-based employees
Other benefits include sick pay (aligned with Netherlands-based employees) and a monthly transportation
allowance of €2,000
Greg Poux-Guillaume is also eligible for certain transitional benefits (temporary housing and travel
reimbursements) to facilitate his transfer from Switzerland to the Netherlands
*Reflecting base salary as per May 1, 2023
•
•
•
•
•
•
•
•
•
•
On-target performance: 100% of annual base
salary for CEO and 80% for CFO
Maximum opportunity of 150% of target, i.e. CEO
capped at 150% and CFO at 120% of annual
base salary
Threshold: no STI pay-out below threshold
The on-target grant equals 200% of base salary
for the CEO and 150% for the CFO
Maximum vesting opportunity is 150% of the
number of performance shares granted, which
equals 300% for the CEO and 225% for the CFO
Threshold: no vesting if performance below
threshold
The minimum shareholding requirement is 300%
of annual base salary for the CEO and 150% for
the CFO
Members of the Board of Management are
required to invest 25% of their STI proceeds (net
after tax and other deductions)
They may invest up to an additional 25%
(maximum investment is 50% of total net STI)
Pension contributions for the CEO equal 16.7% of
base salary and for the CFO equal 22.9% of base
salary
•
•
•
•
•
•
•
•
•
•
•
•
Base salary
Basic pay for the job.
Short-term incentive
Aligning short-term business objectives and business
drivers towards sustainable long-term value creation.
Driving pay for performance.
Long-term incentive
Encouraging sustainable long-term, economic and
shareholder value creation – both absolute and relative
to competitors – and to align Board of Management
interests with those of shareholders, as well as
ensuring retention of the members of the Board of
Management.
Shareholding requirement
Aligning reward to the interests of stakeholders and
emphasizing confidence in performance and strategy.
Share-Matching Plan
Aligning reward to the interests of stakeholders and
emphasizing confidence in performance and strategy.
Pension and other benefits
Post-retirement remuneration and other benefits,
creates alignment with market practice.
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REMUNERATION REPORT
External market context
AEX-listed
European industry
Background of the peer group
ASML
•
• DSM-Firmenich
•
Philips
• Randstad
• RELX
•
Signify
• Wolters Kluwer
Evonik Industries
Air Liquide
•
•
Arkema
• Clariant
• Covestro
•
• Givaudan
• Henkel
• Holcim Group
•
•
Sika
Solvay
•
•
•
The labor market peer group is used to compare AkzoNobel’s remuneration levels
with those in similar companies
The group consists of companies of similar scale, complexity and geographic
reach to AkzoNobel. The composition is limited to European headquartered
companies to reflect local pay practices
AkzoNobel aims to outperform its sector peers and attract and retain high caliber
members of the Board of Management. Therefore, the reference point is set at a
total remuneration package that positions between the median and third quartile of
the peer group (around the median for base salary and STI, between median and
third quartile for LTI)
• Composition of the 2023 labor market peer group is presented on the left
Composition of labor market peer group agreed in 2021 when Remuneration Policy was signed off.
Remuneration Policy pay-mix
CEO pay-mix in %
CFO pay-mix in %
Base salary
LTI
STI
Share-Matching
Base salary
LTI
STI
Share-Matching
AkzoNobel Report 2023
100241702426046510660Threshold and belowTargetMaximum100282102325043480660Threshold and belowTargetMaximum Strategy | Sustainability | Leadership and governance | Financial information
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REMUNERATION REPORT
Remuneration for the Board of Management in 2023
Remuneration of Board of Management for the reported financial year in €
Fixed remuneration
Variable remuneration
Base salary
Fringe benefits1
One-year STI
Multi-year variable LTI
Post-contract
compensation
Termination and other
benefits
Total remuneration
Fixed /
Variable
Based on
2022
2023
2022
2023
20224
20235
2022
2023
2022
2023
2022
2023
2022
2023
2023
Greg Poux–
Guillaume
(CEO)2
Thierry
Vanlancker
(former CEO)3
Maarten de
Vries (CFO)
IFRS 2
expenses6
Market
value at
year-end8
IFRS 2
expenses6
Market
value at
year-end8
IFRS 2
expenses6
Market
value at
year-end8
204,167
1,225,000
25,400
153,800
204,167
1,549,380
88,425
1,802,210
34,067
204,600
204,167
1,225,000
25,400
153,800
204,167
1,549,380
N/A
N/A
34,067
204,600
—
—
556,225
4,934,990
32/68
467,800
3,132,780
51/49
1,178,750
—
33,200
—
469,260
— 1,644,454
—
231,000
— 1,619,5987
5,176,262
—
—
1,178,750
362,432
33,200
7,379
469,260
—
—
272,943
231,000
71,037
1,178,750
1,912,210
1,892,541
86/14
727,750
803,200
33,200
34,500
231,788
812,678
(30,316)
937,038
166,700
186,300
727,750
803,200
33,200
34,500
231,788
812,678
—
122,256
166,700
186,300
—
—
1,129,122
2,773,716
37/63
1,159,438
1,958,934
52/48
1 Fringe benefits consist of car arrangements, social security contributions for Maarten de Vries and Greg Poux-Guillaume and for the latter also temporary housing contributions.
2 Appointed per November 1, 2022.
3 Stepped down per November 1, 2022. Pro-rated salary at the date of departure in April 2023. Financial elements already reported in the 2022 Remuneration report.
4 As approved by the EGM on September 6, 2022, Greg Poux-Guillaume would be entitled to an at-target, pro-rated bonus pay-out for the performance year 2022.
5 In 2023 and 2024, the Board of Management members will invest 50% of their STI proceeds (net after tax) under the Share-Matching Plan.
6 Costs relating to share awards include non-cash expenses of Performance-Related Share Plan and Share-Matching Plan.
7 Provision (1.619.598) made in 2022 to cover for termination and other benefits paid for Thierry Vanlancker in 2023, being severance payment (1,178,750 – not exceeding one annual base salary), salary, post-contract and fringe benefits until termination of his management
agreement on April 21, 2023.
8 Market value at year-end for multi-year variable LTI is based on the number of shares that became unconditional during the year, multiplied by the share price of €74.82 at December 29, 2023 (December 30, 2022: €62.56). As no shares became unconditional in 2022, the
value in the table is zero.
This section presents insights into how the Remuneration
Policy for the Board of Management was implemented in
2023. Actual remuneration was determined in line with the
Remuneration Policy and no derogation of the policy has
been applied. The Supervisory Board has conducted
scenario analyses when determining the (variable)
remuneration outcomes. This included the assessment on
remuneration outcomes under the various performance
scenarios and the impact of share price development
(threshold and below, at-target and maximum).
AkzoNobel Report 2023
Base salary
In 2023, CEO Greg Poux-Guillaume earned a base salary
of €1,225,000, while CFO Maarten de Vries' base salary
was adjusted in two steps to €830,000. The first was in
accordance with the salary adjustments applied for
AkzoNobel employees in the Netherlands and made as
per January 1, 2023. To ensure that the salaries of the
members of the Board of Management were still at the
market median level of our peer group, the Remuneration
Committee performed a broader review of the base
salaries. This review is carried out every three years and
was previously done in 2020. As per May 1, 2023, the
CFO's base salary was increased to €830,000. Following
this increase, the CFO's salary is in line with the market
median of our peer group and therefore in accordance
with the principles of our Remuneration Policy for the
Board of Management. The CEO's salary did not require
an increase as the review confirmed that the salary was in
line with the market median of the peer group.
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REMUNERATION REPORT
Short-term incentives (STI)
Seventy percent of the 2023 STI is measured on financial
objectives that reflect the profitable growth the strategy
aims for. The remaining 30% is measured on quantifiable
non-financial objectives. For the financial objectives, 40%
is based on adjusted operating income (OPI) and 30% is
based on free cash flow (FCF). For the non-financial
objectives, a combination of individual objectives for both
the CFO and CEO were selected. These objectives have
been organized around three priorities related to people,
transformation and portfolio management. The allocation
of percentages to each category suggests a balanced
approach, reflecting a comprehensive strategy aimed at
organizational growth, employee engagement and
technological advancement.
The first objective relates to people. It was measured on
employee engagement, the ability to develop leaders from
within the organization – rather than through external
recruitment – and the strengthening of the Executive
Committee. This objective, which accounted for 40% of
the individual objectives, was achieved at 150%. In terms
of measuring employee commitment, three indicators were
used: (1) Participation in the Voices employee engagement
survey, which was targeted at 75% (the actual
participation rate was 89%). (2) The rate of commitment,
with a target set at the benchmark for industrial
companies. This rate was exceeded, with an outcome of
4.0, compared with a benchmark of 3.8. (3) The net
promoter score, which was measured +11, compared with
-2 for similar companies. All indicators were measured by
an external and independent company.
The second objective was industrial excellence, which
accounted for 30% of the individual objectives and was
assessed at 100%. A new industrial excellence plan was
defined, aiming for a benefit of €250 million by 2027, with
the first milestones scheduled for 2024. Productivity
increased by 2.8% and OTIF (on-time, in-full) passed the
80% mark, while inventory levels decreased from €1,843
million to €1,649 million between 2022 and 2023.
In terms of development of the executive employee group,
79% of the positions that became available during the year
were filled by internal candidates, compared with 50% in
2022. The third indicator related to strengthening
Executive Committee skills and business representation
involved several new appointments. Until the start of 2023,
the composition of the Executive Committee had been
predominantly functional. The addition of four new
members in 2023 – who manage the Decorative Paints
EMEA, Decorative Paints Latin America, Marine and
Protective Coatings, and Automotive and Specialty
Coatings businesses – has strengthened the business
orientation of the company's strategic decisions. The
management team has also been strengthened in some
key functions: General Counsel and Chief Human
Resources Officer.
The final personal objective, called Portfolio and
technology, accounted for 30% and was also evaluated at
100%. The focus of this objective was on the launch of
innovative and sustainable products or solutions. The
following innovations were among those launched during
the year: internal coatings for beverage cans that are free
from intentionally added bisphenols, a range of low-energy
powder coatings, and a biocide-free antifouling.
Following the end of the performance year, the
Supervisory Board assessed the delivered performance
against the targets set. The tables below summarize the
achieved performance.
STI on financial objectives
Performance metric
Adjusted OPI (in € mln)
FCF (in € mln)
Total financial
AkzoNobel Report 2023
Weighting
Threshold
Maximum
Performance
40%
Corresponding target
Corresponding award
30%
Corresponding target
Corresponding award
70%
368
0%
400
0%
1,118
150%
950
150%
1,074
141%
840
113%
129%
Pay-out (as a % of
target)
56.48%
34.00%
90.48%
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REMUNERATION REPORT
STI on personal objectives
Objective
People
Weighting
Metrics
12%
Employee engagement survey – participation rate of 89% (target of 75%) and outcome above benchmark and Net Promoter
Score with a target of +5 and actual performance of +11 versus -2 for the benchmark
Develop senior leaders from within (79% in 2023 versus 50% in 2022 and a target of 60% for 2023)
Strengthen the Executive Committee – BU leaders added and functions strengthened
Performance
150%
Pay-out (as a % of
target)
18%
Industrial excellence
9%
Portfolio and technology
9%
Total personal
30%
Quantifying the industrial excellence plan (aiming for a benefit of €250 million by 2027)
Improve productivity and OTIF by 2.8% and beyond the 80% mark respectively with targets on 2.5% and 85%
Reduce inventories from €1,843 to €1,649 million (target of €1,650 million)
Launch of sustainable products, e.g. internal beverage can coatings free of intentionally added bisphenols, biocide-free
antifouling, and low-energy powder coatings. Target to launch three sustainable products has been met
100%
9%
100%
120%
9%
36%
Following the performance assessment conducted by the
Remuneration Committee, a total pay-out of 126.48% of
target is applied. This results in the following STI pay-out:
• Greg Poux-Guillaume: €1,549,380
• Maarten de Vries: €812,678.
In determining the outcome of the STI elements, the
Remuneration Committee applied a reasonableness test in
which the actual level of performance was critically
assessed in light of the assumptions made at the
beginning of the year.
Share-Matching Plan
The Share-Matching Plan reiterates the importance of
share ownership, which underpins alignment over the long
term. In addition to the required investment of 25% of STI
proceeds (net after tax and other deductions), both the
CEO and CFO decided to invest another 25%, totaling
50% of total net STI proceeds for 2023.
The Share-Matching Plan was suspended for STI
payments made in the years 2019, 2020 and 2021. For
this reason, no matching shares were received by Board
of Management members in 2023.
In 2023, the 2,708 potential matching shares that were
granted to Thierry Vanlancker were pro-rated, resulting in
903 potential matching shares. These shares were
AkzoNobel Report 2023
matched upon termination of the management agreement
in April 2023.
Long-term incentives (LTI)
Vesting of the 2021-2023 LTI Plan
Under the 2021-2023 LTI Share Plan, a conditional grant
of 12,369 shares was made to the CFO. As the CEO
joined AkzoNobel on October 1, 2022, no conditional
grant was made in 2021 to him under this LTI share plan.
Under the 2021-2023 LTI Plan, a conditional grant of
26,713 shares was made to the former CEO. The 26,713
shares that were conditionally granted in 2021 have been
pro-rated, calculated over the period until the end of the
management agreement in April 2023, to respectively
20,777 (28/36 of 26,713) conditional shares.
In line with the Remuneration Policy for the Board of
Management applicable at date of award, the performance
measures (and underlying metrics) were determined as
included in the table on the next page.
At date of award, the Supervisory Board has determined
for each measure (i) the performance level below which no
shares vest; (ii) the performance level at which the target
number of shares vest and (iii) the performance level at
which the maximum number of shares vest.
Following the end of the performance period of the
2021-2023 LTI Share Plan, the Supervisory Board
assessed the delivered performance against the targets
set.
The Supervisory Board set the threshold for adjusted
EBITDA at €1.5 billion and the maximum at €2 billion. The
threshold for ROI was set at 15% and the maximum at
20%. As both adjusted EBITDA and ROI performance
were below threshold in 2023, the corresponding vesting
percentage for these specific parts of the LTI is 0%.
Revenue growth as weighted average is compared with a
defined industry peer group, consisting of the following
companies in the paints and coatings sector: Sherwin-
Williams, Nippon Paint, PPG, Axalta and BASF Coatings.
Organic growth rates to calculate the performance take
into consideration price, mix, volume growth and exclude
the effects of exchange rates and mergers and
acquisitions. For Axalta and Sherwin-Williams, only organic
growth percentage of the Performance Coatings business
growth is taken into consideration. Performance on this
metric is measured against 33 months following the start
of the conditional period for Nippon Paint and BASF
Coatings. The Supervisory Board set the threshold for
revenue growth at -1.0% and the maximum at 1.0%. With
a revenue growth of -0.91% compared to market, the
realization on this metric is 9%.
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94
REMUNERATION REPORT
The ESG targets consist of four equally weighted targets
related to our approach to sustainability. Performance
excludes acquisitions representing more than 2% of
revenues. Actual performance on Total waste (circular)
was below threshold, resulting in no vesting percentage for
this ESG metric. The performance on Renewable
electricity was above the maximum target at 60.7%,
resulting in 150% vesting percentage on this metric. Our
Total recordable injury rate landed at 0.24 at year-end,
which translates into a vesting percentage of 50% for this
metric. The performance on Energy use was 1.82,
resulting in 10% vesting percentage on this final metric.
Following the performance assessment conducted by the
Remuneration Committee, a total vesting – after including
the dividend yield of 7.42% during the vesting period – of
13.21% of the conditionally awarded number of shares is
applied. This results in the following number of shares
vested:
•
Thierry Vanlancker: 2,745 (based on the pro-rated
conditional grant)
• Maarten de Vries: 1,634
LTI on financial objectives
Performance metrics
2021-2023 LTI Share Plan
Measurement approach
Adjusted EBITDA (in € mln)
As is
Return on investment (ROI) (in %)
As is
Revenue growth (in %)
Organic revenue growth compared with Sherwin-Williams, Nippon Paint, PPG,
Axalta and BASF Coatings. For Axalta and Sherwin-Williams, only performance
for the coatings business is taken into consideration. Performance on this
metric is measured against 33 months following the start of the conditional
period for Nippon Paint and BASF Coatings.
Weighting
Threshold
Maximum Performance
Weighted vesting
(as % of
conditional grant)
40% Corresponding target
Corresponding award
20% Corresponding target
Corresponding award
1,500
0%
15%
0%
2,000
150%
20%
150%
20% Corresponding target
(1%)
1%
0%
0%
1.8%
Corresponding award
0%
150%
9%
Performance metrics
2021-2023 LTI Share Plan
Total recordable injury rate
Total waste – circular
Energy use (GJ/ton)
Renewable electricity
Measurement approach
Weighting
Threshold
Maximum Performance
Per 200,000 hours, three-year average
As the percentage circular waste of total waste
Per ton of production
Use of renewable electricity (own operations)
5% Corresponding target
Corresponding award
5% Corresponding target
Corresponding award
5% Corresponding target
Corresponding award
5% Corresponding target
Corresponding award
0.25
0%
60%
0%
1.83
0%
45%
0%
0.20
150%
68%
150%
1.67
150%
55%
150%
0.24
50 %
56 %
0%
1.82
10 %
60.7 %
150 %
Weighted vesting
(as % of
conditional grant)
10.5%
Conditional grant 2023-2025 LTI Plan
As per the Remuneration Policy for the Board of
Management, shares are conditionally granted to the
members of the Board of Management on an annual
basis, following approval from the Remuneration
Committee. The grant level is 200% of base salary for the
CEO and 150% of base salary for the CFO. In 2023, the
CEO received a conditional grant of shares equivalent to
200% of his annual base salary and the CFO received a
conditional grant of shares equivalent to 150% of his
annual base salary on January 1, 2023. The grant price
was determined based on the average share price of an
AkzoNobel Report 2023
AkzoNobel common share in the two weeks following
publication of the annual results:
•
35,105 shares were conditionally granted to Greg
Poux-Guillaume, CEO
16,111 shares were conditionally granted to Maarten
de Vries, CFO
•
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REMUNERATION REPORT
For both the financial and ESG metrics, the Supervisory Board determined for each target: (i) the performance level below which no shares vest; (ii) the performance level at which the target
number of shares vest and (iii) the performance level at which the maximum number of shares vest. The overview below also sets out the targets as applicable for both our financial and ESG
performance metrics.
Vesting of the conditional grant is linked to the four performance metrics presented below.
Performance metrics 2023-2025 LTI Plan
Metrics
Measurement approach
Target (100%)
Weighting
Adjusted EBITDA (in € mln)
Return on investment (ROI) (in %)
Revenue growth (in %)
Environmental, social and governance (ESG)
As is
As is
Organic revenue growth compared with
sector peers
Total recordable injury rate three-year
average
Total waste – % circular waste of total waste
Energy use (GJ/ton)
Renewable electricity
Not disclosed*
Not disclosed*
Not disclosed*
0.23
68%
1.80
60%
40%
20%
20%
5%
5%
5%
5%
* Targets for the financial metrics are not disclosed on ex-ante basis given commercial sensitivity. More details about pay-out curves and actual performance will be
disclosed on ex-post basis.
Overview of share awards
Greg Poux-
Guillaume
(CEO)
Thierry
Vanlancker
(former CEO)
Maarten de
Vries
(CFO)
Plan
Performance/
Vesting period
Award date
End of
performance
period
End of holding
period
Balance at
January 1,
20231
ANS2022
2022-2024
January 1, 2022
February 2025
February 2027
20,450
ANS2023
2023-2025
January 1, 2023
February 2026
February 2028
SMP2023
2023-2026
April 26, 2023
April 26, 2026
April 26, 2028
ANS2020
2020-2022
January 1, 2020
February 2023
n/a
ANS2021
2021-2023
January 1, 2021
February 7, 2024
February 7, 2026
ANS2022
2022-2024
January 1, 2022
February 2025
February 2027
SMP2022
2022-2025
April 21, 2022
April 20, 2025
April 26, 2025
ANS2020
2020-2022
January 1, 2020
February 2023
n/a
ANS2021
2021-2023
January 1, 2021
February 7, 2024
February 7, 2026
ANS2022
2022-2024
January 1, 2022
February 2025
February 2027
ANS2023
2023-2025
January 1, 2023
February 2026
February 2028
SMP2022
2022-2025
April 21, 2022
April 20, 2025
April 20, 2027
SMP2023
2023-2026
April 26, 2023
April 26, 2026
April 26, 2028
—
—
—
27,928
26,238
2,708
—
12,931
12,150
—
1,338
—
Awarded in
2023
Vested in 2023
Forfeited in
2023
Dividend in
2023
Balance at
December 31,
2023
—
35,105
1,046
—
—
—
—
—
—
—
16,111
—
792
—
—
—
—
—
—
(903)
—
—
—
—
—
—
—
—
—
—
(25,948)
(14,577)
(1,805)
—
(11,651)
—
—
—
—
560
962
—
—
765
320
—
—
354
333
441
—
—
21,010
36,067
1,046
—
2,745
11,981
—
—
1,634
12,483
16,552
1,338
792
1 The balance of shares at January 1, 2023, includes cumulative dividend. For ANS2021, the cumulative dividend over 2021 and 2022 of 4.55% applies and for ANS2022, the 2022 dividend yield of 2.58% applies.
For Thierry Vanlancker, the 2.58% has been applied to the pro-rated number of shares after termination of 11,368 conditional shares.
AkzoNobel Report 2023
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96
REMUNERATION REPORT
Board of Management
Greg Poux-Guillaume
Maarten de Vries
Initial appointment
Start date current
appointment
Period of
appointment
Notice period for
AkzoNobel
Notice period for
the Board of
Management
November 1, 2022
November 1, 2022
4.5 years*
6 months
6 months
January 1, 2018
April 22, 2022
4 years
6 months
6 months
Severance
1 time annual base
salary
1 time annual base
salary
* Greg Poux-Guillaume was appointed as member of the Board of Management and CEO with effect from November 1, 2022, for an extended four-year term.
Board of Management
Greg Poux-Guillaume
Maarten de Vries
Shareholding
requirements
300%
150%
2023 base salary
€1,225,000
€830,000
Number of shares
held
Ownership ratio
1,046
22,558
6%
203%
Shareholding requirements
Board of Management members are expected to build up
a shareholding in the company. The minimum
shareholding requirement must be accrued within five
years. This includes privately purchased shares and vested
shares granted under AkzoNobel share-based
compensation plans. The overview above provides insight
into Board of Management share ownership practices as
per December 31, 2023.
Claw back, value adjustment and loans
In 2023, there was no cause for a claw back or value
adjustment by the Remuneration Committee. The
company does not grant loans, advance payments or
guarantees to members of the Board of Management or
any family member of such persons.
Former members of the Board of
Management
Following the disclosure in the 2022 Remuneration report,
termination of Thierry Vanlancker’s management
agreement was executed in accordance with the
management agreement and the Remuneration Policy for
the Board of Management. In accordance with this
management agreement, Thierry Vanlancker was entitled
AkzoNobel Report 2023
to his base salary, post-contract and fringe benefits until
the end of the management agreement at the AGM in April
2023. Furthermore, he received a severance payment of
one annual base salary (not exceeding one annual base
salary, in accordance with the Dutch Corporate
Governance Code 2022). These payments, together with
post-contract and fringe benefits, amounted to a total of
€1,619,598, as provided for in the 2022 Remuneration
report. No STI awards or payments were made in 2023.
No shares were conditionally granted under the
2023-2025 LTI Plan.
The 26,713 shares that were conditionally granted to
Thierry Vanlancker under the 2021-2023 LTI Plan have
been pro-rated, calculated for the period until the end of
the management agreement in April 2023, to respectively
20,777 (28/36 of 26,713) conditional shares, resulting in a
vesting of 2,745 shares as further explained in the LTI
section. In addition, the 2,708 potential matching shares
that were granted to Thierry Vanlancker were pro-rated,
resulting in 903 potential matching shares. These shares
were matched upon termination of the management
agreement in April 2023, as also disclosed in the Share-
Matching Plan section. The total value of all shares that
became unconditional during the year is €272,943. This
means that the value of the total remuneration received in
2023 amounts to €1,892,541.
Contractual arrangements
The overview above provides insight into the main
contractual arrangements of the Board of Management.
Comparative information
Pay ratios
Internal pay ratios are a relevant input factor for
determining the appropriateness of the implementation of
the Remuneration Policy for the Board of Management, as
recognized in the Corporate Governance Code. In 2023,
the ratio between the annual total compensation for the
CEO and the average annual compensation for an
employee was 85.8 (2022: 59.8). This pay ratio was
calculated in accordance with the guidance as provided in
the Corporate Governance Code. In addition, CEO pay
ratios on the basis of median employee remuneration have
been calculated.
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Further details on the development of these amounts and ratios over time can be found in the table below.
Average salary per employee*
% change average remuneration
CEO pay ratio (average)
CEO pay ratio % change
CEO pay ratio (median)
CEO pay ratio % change
2019
2020
2021
2022
2023
54,825
56,061
54,220
55,840
57,536
(3) %
65.0
16%
81.9
15%
2%
99.2
53%
126.4
54%
(3) %
6%
115.7
17%
149.0
18%
59.8
(48%)
81.1
(46%)
3%
85.8
43%
115.0
42%
* Calculated as employee benefits on a full-time equivalent basis over average number of employees.
Five-year analysis
The overviews below and on the next page provide illustrative insights into the Board of
Management remuneration and company performance over the last five reported financial
years.
Board of Management remuneration five-year analysis in € thousands (based on IFRS 2 expenses for multi-year
variable). Percentages indicate year-on-year changes.
CEO
CFO
+13%
+56%
+23%
+93%
+22%
+48%
-47%
-27%
+146%
-56%
In years of transition, the compensation for the newly appointed Board of Management member has been annualized.
AkzoNobel Report 2023
3,5615,5626,2713,3374,9351,8443,5602,5831,1292,77420192020202120222023 Strategy | Sustainability | Leadership and governance | Financial information
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REMUNERATION REPORT
Adjusted EBITDA in € millions (percentages indicate
year-on-year changes)
ROI in %
+29%
+8%
+0%
+24%
-19%
Adjusted OPI in € millions (percentages indicate year-
on-year changes)
FCF in € millions
+11%
-1%
+36%
+24%
-28%
•
•
•
•
In 2020, total rewards (including benefits) for the
Board of Management included a one-off special
payment for the 2020 Performance Incentive Plan,
which incentivized improvement on the company’s
return on sales (ROS). The plan was put in place and
approved by the AGM following the divestment of
Specialty Chemicals
In 2021, total rewards (including benefits) for the CEO
included a one-off special share grant to compensate
for the loss of shares due to the two-year
reappointment and the fact that shares granted as
from 2021 will only vest on a pro-rated basis
2022 presented us with the continued impact of the
COVID-19 pandemic, the geo-political consequences
of the war in Ukraine, shortages and significant price
increases in raw materials and transportation. This
volatile business climate had a severe impact on the
results of the company. Consequently, all financial
components of the short and long-term incentives did
not meet the threshold and delivered no pay-out. The
annualized total compensation for Thierry Vanlancker
reduced by 65% compared with 2021, to €1,912,210
versus €5,514,195 in the previous year. This reflects
the fact that his short-term incentive paid out around
half and no shares granted under the LTI plan 2020
vested. Compared with 2021, the annualized total
compensation for Maarten de Vries reduced by 48%
In response to the challenges posed by an
unpredictable macro-economic landscape, we
outlined a set of strategic priorities designed to guide
us with resilience and adaptability. This resulted in
above target pay-out on the financial metrics of the
short-term incentive. Vesting under the 2021-2023 LTI
Plan was minimal, but the total compensation levels
are showing a better balance between our
commitment to stakeholders and our ability to reward
and retain
AkzoNobel Report 2023
1,3411,4421,4361,1571,429201920202021202220239911,0991,0927891,0742019202020212022202314.1%16.1%16.0%9.8%13.0%20192020202120222023-181962317-2984020192020202120222023 Strategy | Sustainability | Leadership and governance | Financial information
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REMUNERATION REPORT
Policy at a glance – Supervisory Board
Supervisory Board members receive a fixed annual fee for their membership and one or more fixed committee fee(s). In
addition, Supervisory Board members receive an attendance fee for any Supervisory Board or committee meetings they
attend outside their country of residence.
The overview below summarizes the key elements of the Remuneration Policy for the Supervisory Board.
Fixed base fee
Chair
€150,000
Deputy Chair
€93,000
Member
€80,000
Chair
€25,000
Member
€20,000
Audit Committee fee
Remuneration Committee/
Nomination Committee fee
Chair
€20,000
Member
€15,000
Fees are benchmarked against a sample of AEX companies and AkzoNobel’s European remuneration peer group. In accordance with the Corporate Governance Code, Supervisory
Board members are not remunerated in shares.
Attendance fees for meetings outside country of residence and expenses
Continental meetings
€2,500 per meeting
Intercontinental meetings
€5,000 per meeting
Travel expenses and facilities are borne by the company and
reviewed by the Audit Committee
Remuneration for the Supervisory Board in 2023
This section presents insights into how the Remuneration Policy for the Supervisory Board was implemented in 2023. Actual
remuneration was determined in line with the Remuneration Policy and no derogation of the policy has been applied.
Actual remuneration of the members of the
Supervisory Board
in €
Nils Smedegaard Andersen, Chair1
Ester Baiget
Byron Grote, Deputy Chair
Pamela Kirby
Ben Noteboom, Chair2
Jolanda Poots-Bijl
Dick Sluimers
Patrick Thomas
Hans Van Bylen
Total 2023
Total 2022
Remuneration
Attendance fee
Committee
allowance fees
Total
remuneration
46,154
80,000
93,000
80,000
97,308
80,000
80,000
80,000
80,000
716,462
673,330
10,000
10,000
15,000
12,500
—
—
—
12,500
12,500
72,500
50,000
6,154
20,000
25,000
15,000
11,978
20,000
20,000
20,000
15,000
153,132
144,135
62,308
110,000
133,000
107,500
109,286
100,000
100,000
112,500
107,500
942,094
867,465
1 Nils Smedegaard Andersen stepped down after the 2023 AGM.
2 Ben Noteboom was appointed as member of the Supervisory Board with effect from April 21, 2023, and elected as Chair of the Supervisory Board with effect from May 26, 2023.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
100
REMUNERATION REPORT
Comparative information
in €
Nils Smedegaard Andersen, Chair1
Ester Baiget2
Peggy Bruzelius3
Sue Clark4
Byron Grote, Deputy Chair
Michiel Jaski4
Pamela Kirby
Ben Noteboom, Chair5
Jolanda Poots-Bijl6
Dick Sluimers
Patrick Thomas
Hans Van Bylen2
Ben Verwaayen7
Total remuneration
% change total remuneration
2019
162,500
-
37,710
92,500
130,500
87,500
92,500
-
59,166
107,500
97,500
-
92,500
959,876
(4.35)
2020
157,500
-
-
87,500
114,250
85,000
87,500
-
85,000
90,000
92,500
-
32,775
832,025
(13.32)
2021
172,500
-
-
29,492
120,500
31,044
95,000
-
100,000
100,000
102,500
-
-
751,036
(9.73)
2022
182,500
73,956
-
-
130,500
-
105,000
-
100,000
100,000
105,000
70,508
-
867,465
15.50
2023
62,308
110,000
—
—
133,000
—
107,500
109,286
100,000
100,000
112,500
107,500
—
942,094
8.60 %
1 Until April 21, 2023.
5 As of April 21, 2023, elected as Chair with effect from May 26, 2023.
2 As of April 23, 2022.
3 Until April 30, 2019.
6 As of May 1, 2019.
4 Until April 22, 2021.
7 Until April 24, 2020.
Remuneration Policy for 2024
The remuneration policies for the Board of Management
and Supervisory Board were reviewed by the Supervisory
Board in 2020/2021 and approved at the AGM in 2021,
taking into consideration input from stakeholders, the
requirements of the EU Directive on the encouragement of
long-term shareholder engagement (SRD II) and the Dutch
regulation implementing this Directive. At the AGM in
2022, an amendment regarding the STI metrics in the
Remuneration Policy for the Board of Management was
approved. Operating cash flow (OCF) has been replaced
by free cash flow (FCF). The amended Remuneration
Policy for the Board of Management became effective
(retroactively) from January 1, 2022, and will remain
effective until a new Remuneration Policy for the Board of
Management is approved, which will be proposed to
shareholders no later than the AGM in 2025.
Remuneration Policy for the Board of Management
The Supervisory Board has concluded the Remuneration
Policy for the Board of Management is in line with the
company’s objectives. The remuneration it provides is
balanced and adequate. For implementation in 2024, the
Supervisory Board has decided that:
•
The CEO's base salary will be increased by 5.3%,
reflecting the fact that the initial salary was set in 2022
and had not been adjusted in 2023. The 5.3%
increase is below the salary adjustments applied for
AkzoNobel employees in the Netherlands
• No change in base salary will be made for the CFO, as
his salary was adjusted in line with the benchmark in
May 2023
• Metrics applied for STI will remain the same, to
support the company’s strategy and will continue to
apply in 2024
• Metrics applied for LTI in 2023 were adjusted EBITDA,
ROI, revenue growth and ESG. Aligning to our recently
announced mid-term ambitions, and in accordance
AkzoNobel Report 2023
with recent discussions with our shareholders, it will
be proposed to remove revenue growth as a metric for
LTI. This metric is based on a calculated competitive
benchmark based on our competitors' limited
disclosures. Lack of market information forces us to
make certain assumptions to render competitor
information comparable, making the KPI less objective
and less reliable. While growth remains a priority, it's
captured in the absolute EBITDA metric, which
remains. This suggested change in LTI metrics in the
Remuneration Policy for the Board of Management will
be submitted to the 2024 AGM for approval. Should
shareholders approve the proposed amendment,
vesting of the conditional grant will be linked to
adjusted EBITDA (33%), ROI (33%) and ESG (34%),
increasing the importance of ESG as a confirmation of
our commitment to our sustainability targets
Strategy | Sustainability | Leadership and governance | Financial information
101
REMUNERATION REPORT
Greg Poux-Guillaume
Base salary
€1,290,000
Maarten de Vries
Base salary
€830,000
Short-term incentives (STI)
2024 STI pay-out opportunity and performance objectives
CEO target: 100% of base
CEO maximum opportunity: 150% of base
Short-term incentives (STI)
2024 STI pay-out opportunity and performance objectives
CFO target: 80% of base
CFO maximum opportunity: 120% of base
Metrics
Measurement
approach
Adjusted OPI (in € mln)
FCF (in € mln)
As is
As is
Personal objective
Not disclosed1
Long-term incentives (LTI)2
Target (100%)
Weighting
Metrics
Measurement
approach
Not disclosed1
Not disclosed1
Not disclosed1
40%
30%
30%
Adjusted OPI (in € mln)
FCF (in € mln)
As is
As is
Personal objective
Not disclosed1
Long-term incentives (LTI)2
Target (100%)
Weighting
Not disclosed1
Not disclosed1
Not disclosed1
40%
30%
30%
2024-2026 LTI vesting opportunity and performance objectives
CEO target: 200% of base
CEO maximum opportunity: 300% of base
2024-2026 LTI vesting opportunity and performance objectives
CFO target: 150% of base
CFO maximum opportunity: 225% of base
Target (100%)
Weighting
Metrics
Target (100%)
Weighting
Metrics
Adjusted EBITDA (in €
mln)
Return on investment
(ROI) (in %)
Environmental, social
and governance (ESG)
Serious injuries and
fatalities
Female executives
Carbon footprint
Measurement
approach
As is
As is
Not disclosed1
Not disclosed1
3
30%
13%
Measured over 100
million hours
Percentage of female
executives as
percentage of the total
executive population
Cradle-to-grave carbon
footprint (Scope 1, 2 and
3) measured as
reduction versus 2018
baseline
33%
33%
34%
Equally distributed
Equally distributed
Equally distributed
Equally distributed
Adjusted EBITDA (in €
mln)
Return on investment
(ROI) (in %)
Environmental, social
and governance (ESG)
Serious injuries and
fatalities
Female executives
Carbon footprint
Measurement
approach
As is
As is
Not disclosed1
Not disclosed1
3
30%
13%
Measured over 100
million hours
Percentage of female
executives as
percentage of the total
executive population
Cradle-to-grave carbon
footprint (Scope 1, 2 and
3) measured as
reduction versus 2018
baseline
33%
33%
34%
Equally distributed
Equally distributed
Equally distributed
Equally distributed
Final energy use
Per ton of production
(kWh/ton)
251
Final energy use
Per ton of production
(kWh/ton)
251
1 Targets for the financial metrics and personal objectives are not disclosed on ex-ante basis given commercial sensitivity. More
details about pay-out curves and actual performance will be disclosed on ex-post basis.
2 LTI performance measures subject to shareholder approval at the 2024 AGM.
AkzoNobel Report 2023
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102
REMUNERATION REPORT
Remuneration Policy Supervisory Board
The Supervisory Board has concluded that the Remuneration Policy for the Supervisory Board is in line with the objectives of the company, but a proposal will be made to increase the annual
retainer and committee fees of the Supervisory Board members. There is a clear distinction in remuneration between mainly Dutch companies with a two-tier board structure and other
companies within the peer group that have a one-tier board structure, the latter having predominantly higher remuneration levels for supervisory board members. The remuneration of the
Supervisory Board seems to be on average somewhat below median compared with companies with a two-tier board structure and we will, therefore, propose to increase the remuneration
levels for the Supervisory Board as set out in the table below. This proposal takes into consideration that the remuneration levels for the Supervisory Board were last amended in 2021. The
suggested change in the Remuneration Policy for the Supervisory Board will be submitted to the 2024 AGM for approval.
Supervisory Board fee proposal
Proposed amount
Chair
€162,000
Deputy Chair
€100,000
Member
€86,000
Chair
€27,000
Member
€22,000
Fixed base fee
Audit Committee fee
Remuneration/
Nomination Committee fee
Chair
€22,000
Member
€16,000
AkzoNobel Report 2023
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103
AKZONOBEL AND THE CAPITAL MARKETS
Shares
AkzoNobel’s common shares are listed on Euronext
Amsterdam. We’re included in the AEX® Index, which
consists of the top 25 listed companies in the Netherlands,
ranked on the basis of stock market turnover and free
float. During 2023, 99 million AkzoNobel shares were
traded on Euronext Amsterdam, with €7.0 billion turnover
(2022: volume of 159 million, turnover of €11.6 billion).
We have a sponsored level 1 American Depositary Receipt
(ADR) program and ADRs can be traded on the
international OTCQX platform in the US. In 2023, 16 million
ADRs were traded, with $393 million total turnover (2022:
volume of 51 million, turnover of $1.2 billion).
See the table below for stock codes and ticker symbols.
Euronext ticker symbol
AKZA
ISIN common share
NL0013267909
OTC ticker symbol
AKZOY
ISIN ADR
US0101995035
AkzoNobel has 100% free float and a broad base of
international shareholders. Based on an independent
shareholder analysis, the Distribution of institutional shares
chart shows the geographical spread of institutional
shareholders, of which the majority are based in the US
(59%) and the UK (13%). Around 7% of the company’s
share capital is held by private investors, many of whom
are resident in the Netherlands. Approximately 41% of the
company’s share capital was held by ESG investors1,
while 14.5% was held by ESG funds2 at year-end 2023.
Key share data*
2021
2022
2023
Year-end (share price in €)
96.50
62.56
74.82
Year-high (share price in €)**
107.80
98.50
78.82
Year-low (share price in €)**
83.50
56.22
61.42
Number of shares outstanding at year-
end (in millions)
Market capitalization at year-end (in €
billions)
Dividend per share (in €)
Dividend yield (in %)
* Based on Bloomberg share data
** Based on close value
182
174
171
17.5
1.98
2.1
10.9
1.98
3.2
12.76
1.98
2.6
The AkzoNobel share price was up 20% at year-end 2023
when compared with year-end 2022. This compares with
the AEX, which was up by 14% at year-end 2023, and our
global coatings peers3 up 24% over the same period (see
Share price performance graph on the right).
Our CFO, Maarten de Vries, had the honor of performing the gong ceremony to
officially open the trading day at Euronext Amsterdam. He was accompanied by
colleagues from our Executive Committee and Investor Relations team to mark
AkzoNobel’s 105th anniversary of being listed on the Amsterdam stock exchange.
The company was also one of the “founding fathers” of the AEX (the main index of the
Dutch stock exchange) when it was set up 1983 – and has been the best performer
out of the original members in the 40 years since then.
Benchmark performance indexed to AkzoNobel
share price as of December 30, 2022
AkzoNobel share price in €
AkzoNobel
AEX
Global coatings peers
Jan
23
Feb
23
Mar
23
Apr
23
May
23
Jun
23
Jul
23
Aug
23
Sep
23
Oct
23
Nov
23
Dec
30
'22
Dec
29
'23
Distribution of institutional shares in 2023 in %
A US
B UK
C Rest of Europe
D Rest of World
59
13
24
4
1 As calculated by Nasdaq, according to their methodology, which is to include the sum of: (1) Core sustainable and responsible investor firms where 100% of equity assets are managed with an environmental, social and governance (ESG) approach; (2) Sustainable and
responsible investor themed funds managed by a broad range of sustainable and responsible investors.
2 As calculated by Nasdaq and includes investment funds that take into account the impact that companies they invest in have on the environment, their stakeholders and society, alongside potential financial returns.
3 Global coatings peer group includes Asian Paints, Axalta, Berger Paints, Chugoku, Kansai Paint, Masco, Nippon Paint, PPG, RPM, Sherwin-Williams, Skshu Paint.
AkzoNobel Report 2023
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104
AKZONOBEL AND THE CAPITAL MARKETS
Credit rating and bonds
AkzoNobel is committed to a strong investment grade
credit rating. Regular review meetings are held between
rating agencies and AkzoNobel senior management. See
the table below for the current credit ratings and outlook.
The maturity schedule of outstanding bonds is also shown
below.
Bonds maturity in € millions (nominal amounts)
Dividend
Our dividend policy is to pay a stable to rising dividend. In
2023, an interim dividend of €0.44 per share (2022: €0.44)
was paid. The Board of Management proposes a 2023
final dividend of €1.54 per share, which would equal a total
2023 dividend of €1.98 (2022: €1.98) per share.
The dividend proposed to the 2024 Annual General
Meeting of shareholders, following adoption, will be
payable as of May 7, 2024. AkzoNobel’s shares will be
trading ex-dividend as of April 29, 2024. In compliance
with the listing requirements of Euronext Amsterdam, the
record date for the final dividend will be April 30, 2024.
Dividend in € per share*
Interim dividend
Final dividend
1.98
1.98
1.98
1.54*
0.44
Rating agency
Moody's
Standard & Poor's
Long-term
rating
Baa2
BBB
Outlook
Stable
Stable
* Proposed
Analyst recommendations
At year-end 2023, AkzoNobel was covered by 22 equity
research analysts. An overview of analyst
recommendations is shown in the graph below.
Analyst recommendations
A Buy
B Hold
C Sell
11
8
3
External benchmarks
AkzoNobel is one of 25 constituents of the AEX® ESG
Index on Euronext Amsterdam. The index identifies
companies that are demonstrating the best environmental,
social and governance (ESG) practices – giving investors
the opportunity to invest in the most sustainable listed
companies. Our inclusion is based on the assessment
performed by Sustainalytics.
Following 2023 reviews, our ESG performance was
reaffirmed by external rating agencies. For example,
AkzoNobel maintained the highest possible rating (AAA)
from MSCI for the eighth consecutive year, and the
company is ESG top rated by Sustainalytics – the best
performance level in the industry. Please refer to the
Sustainability statements for a full overview of external
sustainability ratings.
AkzoNobel Report 2023
ABC0.440.441.541.542021202220235005006007506005002024202520262027202820292030203120322033 Strategy | Sustainability | Leadership and governance | Financial information
105
FINANCIAL STATEMENTS
This section includes a detailed overview of our
2023 financial performance.
During 2023, we launched next generation coatings
technology which will help the beverage can industry move to
products free from materials of concern. Our Packaging
Coatings business launched the first two products in its new
Accelstyle range. Designed for the exterior of conventional
two-piece aluminum beverage cans, both are free from
intentionally added bisphenols. We're also building a
production plant in Spain at our Vilafranca site, which will
produce the new coatings for the metal packaging industry in
Europe, Middle East and Africa.
AkzoNobel Report 2023
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106
FINANCIAL STATEMENTS
Financial summary
Glossary
Appendix – list of affiliated legal entities and
corporations
Appendix – EU taxonomy
187
191
195
199
Consolidated financial statements
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the Consolidated financial statements
Note 1
Summary of material accounting policies
Note 2
Scope of consolidation
Note 3
Segment information
Note 4
Revenue
Note 5
Operating income
Note 6
Employee benefits
Note 7
Financing income and expenses
Note 8
Income tax
Note 9
Earnings per share
Note 10 Intangible assets
Note 11 Property, plant and equipment
Note 12 Leases
Note 13 Investments in associates
Note 14 Financial non-current assets
Note 15 Inventories
Note 16 Trade and other receivables
Note 17 Group equity
Note 18 Post-retirement benefit provisions
Note 19 Other provisions and contingent liabilities
Note 20 Net debt
Note 21 Trade and other payables
AkzoNobel Report 2023
Note 22 Cash flow
Note 23 Commitments
Note 24 Related party transactions
Note 25 Remuneration of the Supervisory Board
and the Board of Management
Note 26 Financial risk management
Note 27 Subsequent events
Company financial statements
Statement of income
Balance sheet
Note A General information
Note B
Financing income and expenses
Note C Intangible assets
Note D
Financial non-current assets
Note E
Short-term receivables
Note F
Shareholders' equity
Note G Net debt
Note H Other current liabilities
Note I
Financial instruments
Note J
Contingent liabilities
Note K
Independent Auditor's fees
Other information
Proposal for profit allocation
Profit allocation and distributions
Special rights to holders of priority shares
Independent auditor's report
Limited assurance report of the independent auditor
107
107
108
109
110
111
119
120
124
126
127
129
130
135
136
139
141
142
143
143
143
144
146
153
155
158
158
158
158
158
159
163
164
164
165
165
166
166
167
168
169
170
171
171
171
172
172
172
173
184
Strategy | Sustainability | Leadership and governance | Financial information
CONSOLIDATED STATEMENT
OF INCOME
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
107
2022
378
2023
483
(375)
(149)
86
38
(289)
(111)
(163)
(15)
2
(176)
(465)
(87)
(115)
28
(87)
(61)
34
(1)
(28)
(139)
344
310
34
344
in € millions, for the year ended December 31
Note
2022
2023
in € millions, for the year ended December 31
Continuing operations
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
General and administrative expenses
Research and development expenses
Other results
4
5
10,846
(6,923)
5
5
5
5
(2,308)
(649)
(258)
—
Operating income
Financing income and expenses
7
(124)
18
13
8
Results from associates
Profit before tax
Income tax
Profit for the period from continuing
operations
Discontinued operations
Profit/(loss) for the period from discontinued
operations
Profit for the period
Attributable to
Shareholders of the company
Non-controlling interests
Profit for the period
Earnings per share, in €
Continuing operations
Basic
Diluted
Discontinued operations
Basic
Diluted
Total operations
Basic
Diluted
AkzoNobel Report 2023
9
9
9
9
9
9
Profit for the period
10,668
(6,434)
Other comprehensive income/(expense)
Items that will not be reclassified to the statement of income:
3,923
4,234
Post-retirement benefits
(2,347)
(648)
(270)
60
(272)
27
(3,215)
708
602
(214)
388
(10)
378
352
26
378
2.07
2.06
(0.06)
(0.05)
2.01
2.01
Income tax
Net effect
Items that may be reclassified subsequently to the statement of income:
Exchange rate differences arising on translation of foreign operations
(3,205)
1,029
Cash flow hedges
Income tax
Net effect
Other comprehensive income/(expense) for the period
Comprehensive income/(expense) for the period
Comprehensive income attributable to
Shareholders of the company
Non-controlling interests
Comprehensive income/(expense) for the period
784
(296)
488
(5)
483
442
41
483
2.62
2.61
(0.03)
(0.03)
2.59
2.58
Strategy | Sustainability | Leadership and governance | Financial information
108
CONSOLIDATED BALANCE SHEET, BEFORE ALLOCATION OF PROFIT
in € millions, at December 31
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Investments in associates
Financial non-current assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Short-term investments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Shareholders' equity
Non-controlling interests
Group equity
Non-current liabilities
Post-retirement benefit provisions
Other provisions
Deferred tax liabilities
Long-term borrowings
Total non-current liabilities
Current liabilities
Short-term borrowings
Trade and other payables
Current tax liabilities
Current portion of provisions
Total current liabilities
Total equity and liabilities
AkzoNobel Report 2023
Note
2022
2023
10
11
12
8
13
14
15
16
8
20
20
17
17
18
19
8
20
20
21
8
18, 19
4,072
1,968
291
498
193
1,475
1,843
2,447
168
336
1,450
4,333
215
387
167
561
3,332
2,543
2,801
236
166
4,081
1,994
302
512
216
1,409
1,649
2,483
134
265
1,513
4,322
224
423
161
557
3,165
2,398
2,933
211
164
8,514
6,044
14,558
4,546
4,306
5,706
14,558
8,497
6,244
14,741
4,548
4,447
5,746
14,741
Strategy | Sustainability | Leadership and governance | Financial information
109
CONSOLIDATED STATEMENT OF CASH FLOWS
in € millions, for the year ended December 31
Profit for the period from continuing operations
Adjustments to reconcile profit for the period to net cash generated from operating activities
Amortization and depreciation
Impairment losses
Financing income and expenses
Results from associates
Pre-tax result on acquisitions and divestments
Income tax
Changes in working capital
Pension pre-funding
Changes in post-retirement benefit provisions
Changes in other provisions
Interest paid
Income tax paid
Other changes
Net cash generated from/(used for) operating activities
Capital expenditures*
Interest received
Dividends from associates
Acquisition of consolidated companies, net of cash acquired
Investments in short-term investments
Repayments of short-term investments
Proceeds from divestments, net of cash divested
Other changes
Net cash generated from/(used for) investing activities
Proceeds from borrowings
Borrowings repaid
Share buyback
Dividends paid
Net cash generated from/(used for) financing activities
Net cash generated from/(used for) continuing operations
Net cash generated from/(used for) discontinued operations
Net change in cash and cash equivalents from continued and discontinued operations
Net cash and cash equivalents at January 1
Effect of exchange rate changes on cash and cash equivalents
Net cash and cash equivalents at December 31
* Capital expenditures include investments in intangible assets (refer to Note 10) and investments in property, plant and equipment (refer to Note 11).
AkzoNobel Report 2023
10, 11, 12
10, 11, 12
7
13
2
8
22
18
18
19
10, 11
2
20
20
20
20
17
17
20
Note
2022
2023
388
368
6
124
(18)
(21)
214
(509)
47
(31)
(33)
(78)
(224)
30
(292)
14
14
(588)
(1,361)
1,084
36
(2)
9,511
(7,322)
(669)
(379)
488
357
4
272
(27)
(66)
296
254
—
(40)
(13)
(167)
(295)
63
(286)
71
13
(114)
(64)
142
96
(2)
1,126
263
(1,095)
(144)
5,836
(6,295)
—
(368)
1,141
309
(9)
300
1,112
(14)
1,398
(827)
155
(6)
149
1,398
(94)
1,453
Strategy | Sustainability | Leadership and governance | Financial information
110
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
in € millions
Balance at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye1
Balance at January 1, 2022
Profit for the period
Other comprehensive income/(expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback2
Equity-settled transactions3
Acquisition of non-controlling interests
Balance at December 31, 2022
Profit for the period
Reclassification into the statement of income
Other comprehensive income/(expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback
Equity-settled transactions3
Balance at December 31, 2023
Attributable to shareholders of the company
Subscribed share
capital
Cash flow hedge
reserve
Cumulative
translation
reserve
Other (legal)
reserves and
undistributed
profit
Shareholders’
equity
Non-controlling
interests
Group equity
91
—
91
—
—
—
—
—
(4)
—
—
87
—
—
—
—
—
—
(2)
—
85
(19)
—
(19)
—
(15)
—
(15)
—
—
—
—
(34)
—
46
(12)
—
34
—
—
—
—
(493)
—
(493)
—
(165)
2
(163)
—
—
—
—
5,846
16
5,862
352
(375)
86
63
(347)
(656)
14
—
5,425
16
5,441
352
(555)
88
(115)
(347)
(660)
14
—
(656)
4,936
4,333
—
(4)
(50)
(1)
(55)
—
—
—
442
—
(149)
38
331
(338)
2
17
442
42
(211)
37
310
(338)
—
17
(711)
4,948
4,322
211
2
213
26
2
—
28
(29)
—
—
3
215
41
—
(7)
—
34
(25)
—
—
224
5,636
18
5,654
378
(553)
88
(87)
(376)
(660)
14
3
4,548
483
42
(218)
37
344
(363)
—
17
4,546
1 As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 "Financial Reporting in Hyperinflationary Economies" has been applied for our activities in Türkiye as from January 1, 2022. Refer to Note 7 Financing income and expenses for details on the
financial impact from applying IAS 29. The opening balance adjustment includes a tax charge of €4 million.
2 Includes a tax credit of €2 million.
3 Includes a tax charge of €1 million (2022: €2 million).
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111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES
Going concern
General information
Akzo Nobel N.V. is a public limited liability company headquartered in the Netherlands. The
address of our registered office is Christian Neefestraat 2, Amsterdam; the Chamber of
Commerce number is 09007809. We have attached a list of subsidiaries and associated
companies, drawn up in conformity with Articles 379 and 414 of Book 2 of the Dutch Civil
Code, as an appendix to our annual report. The principal activity of AkzoNobel is the
production and selling of paints and coatings.
We have prepared the Consolidated financial statements of Akzo Nobel N.V. in accordance
with International Financial Reporting Standards as adopted by the European Union (IFRS).
The Consolidated financial statements also comply with the financial reporting requirements
included in Title 9 of Book 2 of the Dutch Civil Code.
2023 results at a glance
The management report within the meaning of Article 391 of Book 2 of the Dutch Civil
Code consists of the following parts of the annual report:
•
• CEO statement
• How we created value
•
•
•
•
•
•
•
•
•
•
•
Strategy and operations
Sustainability statements
Leadership and governance: Our Board of Management and Executive Committee
Leadership and governance: Statement of the Board of Management
Leadership and governance: Corporate governance statement
Leadership and governance: Risk management
Leadership and governance: Integrity and compliance management
Leadership and governance: Remuneration report
Financial information: Note 5 Operating income
Financial information: Note 26 Financial risk management
Appendix: EU taxonomy
On February 26, 2024, the Board of Management authorized the financial statements for
issue. The financial statements as presented in this report are subject to adoption by the
Annual General Meeting of shareholders on April 25, 2024.
AkzoNobel Report 2023
The Consolidated financial statements have been prepared on a going concern basis,
resulting from management's assessment of the ability of AkzoNobel to continue its
operations for the foreseeable future.
Management has assessed the ability of AkzoNobel to continue as a going concern based
on an evaluation of, among others, the financial position, expected future cash flows and
market developments.
At December 31, 2023, cash and cash equivalents were €1.5 billion. We also assessed the
ability of the company to obtain financing, taking into account the company's external credit
rating, which we are committed to retain at strong investment grade.
Expected future cash flows are based on the latest forecasts. These forecasts take into
account internal and external developments relevant in the assessment of the ability of
AkzoNobel to continue as a going concern, including but not limited to market
developments, developments in the macro-economic environment (e.g. inflation, see
disclosure on inflation in this Note) and climate-related developments (see disclosure on
climate change in this Note).
Management's assessment did not lead to uncertainties in relation to AkzoNobel's ability to
continue as a going concern.
Impact of climate change
The potential effects on the financial statements of climate change have been assessed.
This assessment included the impact of physical risks, such as those associated with water
scarcity, flooding and weather events, as well as transitional risks that may lead to changes
in technology, market dynamics and regulations. A desktop study was performed relating
to physical climate risks. We also considered AkzoNobel's commitments to reduce carbon
emissions as approved by the Science Based Targets initiative (SBTi), and related estimates
as to investments and the timing thereof. The resulting impact on the financial statements,
including in the areas of fixed assets depreciation and recoverability assessments, was not
deemed material to the company's financial position and results of operations as of, and for
the year ended, December 31, 2023.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
112
Impact from the war in Ukraine and sanctions on Russia
Changes in accounting policies and first-time application
Our business in Ukraine and Russia combined represented less than 2% of our 2023
revenue (2022: about 2%), of which the vast majority concerned Russia.
In 2022, following the EU sanctions, the majority of our Performance Coatings activities in
Russia were suspended. The residual Russian business since then has been locally
operated. AkzoNobel has assessed the potential accounting impact from the localization of
the Russian business. Taking into account the applicable IFRS standards, we have
concluded that our Russian business can still be included in our scope of consolidation.
No significant impairments of assets occurred in Russia in either 2023 or 2022; in Ukraine,
the value of the assets is immaterial.
Accounting pronouncements with potential relevance for AkzoNobel, which became
effective for 2023, include IFRS 17 “Insurance contracts” and amendments to this
standard, amendments to IAS 8 “Definition of accounting estimates”, amendments to IAS 1
and IFRS Practice Statement 2 “Disclosure of Accounting Policies”, amendments to IAS 12
“Deferred Tax related to Assets and Liabilities arising from a Single Transaction” and
“International Tax Reform - Pillar Two Model Rules”. These changes in accounting policies
had no material impact on our Consolidated financial statements. With regards to the
exemption for recognizing and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes, as per the amendments to IAS 12, reference is
made to Note 8 Income tax.
Impact of inflation
The financial year 2023 saw continued inflation due to geo-political and macro-economic
developments. The impacts from rising inflation have been considered in the financial
statements where relevant. Reference is made to Note 5 Operating income on financial
developments during the year, Note 7 Financing income and expenses, Note 10 Intangible
assets on the annual impairment testing process, Note 15 Inventories on the impact of raw
material price increases, Note 18 Post-retirement benefit provisions on the impact of
inflation rates on the defined benefit obligations (DBO) and Note 26 Financial Risk
Management on sensitivities in relation to changes in interest rates.
Consolidation
The Consolidated financial statements include the accounts of Akzo Nobel N.V. and its
subsidiaries. Subsidiaries are companies over which Akzo Nobel N.V. has control, because
it is exposed, or has rights, to variable returns from its involvement with the subsidiary and it
has the ability to affect returns through its power over the subsidiary. Non-controlling
interests in equity and in results are presented separately.
Discontinued operations/Held for sale
A discontinued operation is a component of our business that represents a separate major
line of business or geographical area of operations that has been disposed of, or is held for
sale, or is a subsidiary acquired exclusively with a view to resale. Assets and liabilities are
classified as held for sale if it is highly probable that the carrying value will be recovered
through a sale transaction within one year, rather than through continuing use. When
reclassifying assets and liabilities as held for sale, we recognize the assets and liabilities at
the lower of their carrying value or fair value less costs to sell. Assets held for sale are not
depreciated and amortized but tested for impairment. In case of discontinued operations,
the comparative figures in the Consolidated statement of income and Consolidated
statement of cash flows are re-presented. The Consolidated balance sheet comparative
figures are not re-presented.
Use of estimates
The preparation of the financial statements in compliance with IFRS requires management
to make judgments, estimates and assumptions that affect amounts reported in the
financial statements. The estimates and assumptions are based on experience and various
other factors that are believed to be reasonable under the circumstances and are used to
judge the carrying values of assets and liabilities that are not readily apparent from other
sources. The estimates and underlying assumptions are reviewed on an ongoing basis. The
most critical accounting policies involving a higher degree of judgment and complexity in
applying principles of valuation and for which changes in the assumptions and estimates
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
113
could result in significantly different results than those recorded in the financial statements
are the following:
•
Scope of consolidation, including purchase price allocations for business combinations
(Note 2)
Income tax and deferred tax assets, including uncertain tax positions (Note 8)
Impairment of intangible assets, property, plant and equipment and right-of-use assets
(Note 10, 11, 12)
Post-retirement benefit provisions (Note 18)
Provisions and contingent liabilities (Note 19)
•
•
•
•
Business combinations (Note 2)
respectively. Cash flows from derivatives are recognized in the statement of cash flows in
the same category as those of the hedged items.
Operating segments
We determine and present operating segments based on the information that is provided to
the Executive Committee, our chief operating decision-maker during 2023, to make
decisions about resources to be allocated to the segments and assess their performance.
Segment results reported to the Executive Committee include items directly attributable to
a segment, as well as those items that can be allocated on a reasonable basis.
In business combinations, identifiable assets and liabilities, and contingent liabilities, are
recognized at their fair values at the acquisition date. Determining the fair value requires
significant judgments on future cash flows to be generated.
Foreign currencies
Goodwill in a business combination represents the excess of the consideration paid over
the net fair value of the acquired identifiable assets, liabilities and contingent liabilities. If the
cost of an acquisition is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognized directly in the statement of income.
The fair value of brands, customer relationships and know-how acquired in a business
combination is estimated using generally accepted valuation methods. These include the
relief-from-royalty method, the incremental cash flow method and the multi-period excess
earnings method.
The fair value of property, plant and equipment acquired in a business combination is
based on estimated market values.
The fair value of inventories acquired in a business combination is determined based on
estimated selling prices in the ordinary course of business, less the estimated costs of
completion and sale and a reasonable profit margin, based on the effort required to
complete and sell the inventories.
Statement of cash flows
We have used the indirect method to prepare the statement of cash flows. Cash flows in
foreign currencies have been translated at transaction rates. Acquisitions or divestments of
subsidiaries are presented net of cash and cash equivalents acquired or disposed of,
AkzoNobel Report 2023
Transactions in foreign currencies are translated into the functional currency using the
foreign exchange rate at transaction date. Monetary assets and liabilities denominated in
foreign currencies are translated into the functional currency using the exchange rates at
the balance sheet date. Resulting foreign currency differences are included in the statement
of income in financing income and expenses. Non-monetary assets and liabilities
denominated in foreign currencies are translated into the functional currency at the
exchange rate at acquisition date.
The assets and liabilities of entities with other functional currencies are translated into euros,
the functional currency of the parent entity, using the exchange rates at the balance sheet
date. The income and expenses of entities with other functional currencies are translated
into the functional currency, using the exchange rates at transaction date.
Foreign exchange rate differences resulting from translation into the functional currency of
investments in subsidiaries and of intercompany loans of a permanent nature with other
functional currencies are recorded as a separate component (cumulative translation
reserve) within other comprehensive income. These cumulative translation adjustments are
reclassified (either fully or partly) to the statement of income upon disposal (either fully or
partly) or liquidation of the foreign subsidiary to which the investment or the intercompany
loan with a permanent nature relates. Foreign currency differences arising on the translation
of a financial liability designated as an effective hedge of a net investment in a foreign
operation are recognized in the cumulative translation reserve (in Other comprehensive
income).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
114
When a subsidiary is operating in a hyperinflationary country, the financial statements of this
entity are restated into the current purchasing power at the end of the reporting period. In
addition, exchange rates at this balance sheet date are used to translate both the balance
sheet and the statement of income into euros. Hyperinflation accounting is applied for
Argentina and Türkiye based on the historical cost approach and using the Consumer Price
Index (CPI). CPI rate developments for Argentina and Türkiye are included in the table CPI
rates at December 31. For reference, the balance sheet exchange rates for both countries
have also been included.
CPI rates at December 31
Country
Argentina
Türkiye
2021
582
687
2022
1,135
1,128
2023
3,533
1,859
Balance sheet exchange rates1 at December 31
Currency
Argentinian peso
Turkish lira
1Foreign currency equivalent of 1 euro
2021
116.16
15.00
2022
188.62
19.97
2023
849.91
32.73
For a consolidated overview of financial impacts from hyperinflation accounting, refer to
Note 7 Financing income and expenses.
Exchange rates of key currencies
The principal exchange rates against the euro used in preparing the balance sheet and the
statement of income are (table shows foreign currency equivalents of 1 euro):
Currency
US dollar
Pound sterling
Chinese yuan
AkzoNobel Report 2023
Balance sheet
Statement of income
2022
2023
%
2022
2023
1.07
0.88
7.43
1.11
0.87
7.86
3.8
(1.7)
5.9
1.05
0.85
7.09
1.08
0.87
7.67
%
2.6
2.0
8.3
Revenue recognition (Note 4)
Sale of goods
AkzoNobel's main business consists of straightforward selling of goods (paints and
coatings) to customers at contractually determined prices and conditions without any
additional services. Although the transfer of risks and rewards is not the only criterion to be
considered to determine whether control over the goods has transferred, it is in most
situations considered to be the main indicator of the customer's ability to direct the use of,
and obtain the benefits from the asset, and largely also coincides with the physical transfer
of the goods and the obligation of the customer to pay.
Variable considerations, including among others rebates, bonuses, discounts and
payments to customers, are accrued for as performance obligations are satisfied and
revenue is recognized. Variable considerations are only recognized when it is highly
probable that these are not subject to significant reversal. In case of expected returns,
revenue is not recognized for such products. Instead, we record a liability for the refund and
an asset for the products that will be returned. A provision for warranties is recognized
when the underlying products or services are sold, generally based on historical warranty
data. Revenue is recognized net of rebates, discounts and similar allowances, and net of
sales tax.
Equipment provided to customers
AkzoNobel regularly provides mixing machines, store interior and other assets to its
customers at the start of a paints or coatings delivery contract. The delivery of such assets
qualifies as a separate performance obligation. Revenue can only be recognized at the
moment of transfer of such assets, when there is an agreed sales price or when there is a
binding take-or-pay commitment for a minimum quantity of paints or coatings to be
acquired by the customer.
Services
AkzoNobel provides certain training, technical or support services to customers, as well as
shipping and handling activities for its customers. Service revenue is recognized over time
when the related services are being provided. When not separately invoiced, part of the
sales price of paints or coatings is allocated to such services.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
115
Post-retirement benefits (Note 6, 18)
Contributions to defined contribution plans are recognized in the statement of income as
incurred.
Most of our defined benefit pension plans are funded with plan assets that have been
segregated in a trust or foundation. We also provide post-retirement benefits other than
pensions to certain employees, which are generally not funded. Valuations of both funded
and unfunded plans are carried out by independent actuaries, based on the projected unit
credit method. Post-retirement costs primarily represent the increase in the actuarial
present value of the obligation for projected benefits, based on employee service during the
year and interest on the net defined benefit liability/asset. When the calculation results in a
benefit to AkzoNobel, the recognized asset is limited to the present value of economic
benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan. An economic benefit is available if it is realizable during the life of
the plan, or on the settlement of the plan liabilities. The effect of these so-called asset
ceiling restrictions and any changes therein are recognized in Other comprehensive income.
Remeasurement gains and losses, which arise in calculating our obligations, are recognized
in Other comprehensive income. When the benefits of a plan improve, the portion of the
increased benefits related to past service by employees is recognized as an expense in the
statement of income immediately. We recognize gains and losses on the curtailment or
settlement of a defined benefit plan when the curtailment or settlement occurs.
Interest on the net defined benefit liability/asset is included in financing expenses related to
post-retirement benefits. Other charges and benefits recognized are reported in operating
income, unless recorded in other comprehensive income.
Other employee benefits (Note 6, 19)
Provisions for other long-term employee benefits are measured at present value, using
actuarial assumptions and methods. Any actuarial gains and losses are recognized in the
statement of income in the period in which they arise.
employees normally become unconditionally entitled to the shares with a corresponding
increase in shareholders' equity. Amortization is accelerated in the event of earlier vesting or
settlement.
Income tax (Note 8)
Income tax expense comprises both current and deferred tax, including effects of changes
in tax rates. In determining the amount of current and deferred tax, we also take into
account the impact of uncertain tax positions and whether additional taxes may be due.
Income tax is recognized in the statement of income, unless it relates to items recognized in
other comprehensive income or equity.
Current tax includes the expected tax payable and receivable on the taxable income for the
year, using tax rates enacted or substantively enacted at reporting date, as well as (any
adjustments to) tax payables and receivables with respect to previous years.
Deferred tax is recognized using the liability method on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the
Consolidated financial statements. We do not recognize deferred tax for the initial
recognition of goodwill, the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit, and differences related to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future and we can control the
timing of the reversal of the temporary difference. Deferred tax assets are recognized for
unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilized.
AkzoNobel has applied the exemption for recognizing and disclosing information about
deferred tax assets and liabilities related to Pillar Two income taxes.
Measurement of deferred tax assets and liabilities is based upon the enacted or
substantively enacted tax rates expected to apply to taxable income in the years in which
temporary differences are expected to be reversed. Deferred tax positions are not
discounted.
Share-based compensation (Note 6)
Earnings per share (Note 9)
AkzoNobel has a performance-related and a restricted share plan, as well as a share-
matching plan, under which equity-settled shares are granted to certain employees. The fair
value is measured at grant date and amortized over the three-year period during which the
Basic earnings per share is calculated by dividing the profit for the period attributable to
shareholders of the company by the weighted average number of common shares
outstanding during the year, adjusted for any repurchased shares. Diluted earnings per
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
116
share is calculated by adjusting the weighted average number of common shares
outstanding during the year for the diluting effect of the shares of the performance-related
share plan, the restricted share plan and the share-matching plan.
Adjusted earnings per share represents the basic earnings per share from continuing
operations excluding identified items, after taxes.
Depreciation is calculated using the straight-line method, based on the estimated useful life
of the asset components. The useful life of plant equipment and machinery generally ranges
from 10 to 25 years, and for buildings ranges from 20 to 50 years. Land is not depreciated.
Other equipment contains assets with a useful life ranging from 3 to 20 years. In the
majority of cases, residual value is assumed to be not significant. Depreciation methods,
useful lives and residual values are reassessed annually.
Government grants
Government grants related to costs are deducted from the relevant costs to be
compensated in the same period. Government grants to compensate for the cost of an
asset are deducted from the cost of the related asset. Emission rights granted by the
government are recorded at cost. A provision is recorded if the actual emission is higher
than the emission rights granted.
Intangible assets (Note 10)
Intangible assets are valued at cost less accumulated amortization and impairment
charges. Intangible assets with an indefinite useful life, such as goodwill and certain brands,
are not amortized, but tested for impairment annually using the value-in-use method.
Intangible assets with a finite useful life, such as licenses, know-how, certain brands,
customer relationships, intellectual property rights, emission rights, software expenditures
(in as far as AkzoNobel controls the software configured or customized) and capitalized
development costs, are capitalized at historical cost and amortized on a straight-line basis
over the estimated useful life of the assets, which generally ranges from 5 to 40 years for
brands with finite useful lives, 5 to 25 years for customer relationships, and 3 to 15 years for
other intangibles. Amortization methods, useful lives and residual values are reassessed
annually. Research expenditures are recognized as an expense as incurred.
Property, plant and equipment (Note 11)
Property, plant and equipment are valued at cost less accumulated depreciation and
impairment charges. Costs include expenditures that are directly attributable to the
acquisition of the asset, including borrowing cost of capital investment projects under
construction.
AkzoNobel Report 2023
Costs of major maintenance activities are capitalized and depreciated over the estimated
useful life. Maintenance costs which cannot be separately defined as a component of
property, plant and equipment are expensed in the period in which they occur. We
recognize conditional asset retirement obligations in the periods in which sufficient
information becomes available to reasonably estimate the cash outflow.
Leases (Note 12, 20)
As a lessee, we assess whether a contract is, or contains, a lease at inception. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for a consideration.
At commencement, or on modification, of a contract that contains a lease component, we
allocate the consideration in the contract to each lease component on the basis of its
relative stand-alone price. However, for the leases of cars, we have elected not to separate
non-lease components and account for the lease and non-lease components as a single
lease component.
We recognize a right-of-use asset and a lease liability at the lease commencement date.
The right-of-use asset is initially measured at the present value of the lease liability. The
right-of-use asset value contains lease prepayments, lease incentives received, the initial
direct costs and an estimate of restoration, removal and dismantling costs.
The right-of-use assets are depreciated using the straight-line method from the
commencement date to the end of the lease term or shorter economic life. In addition, the
value of right-of-use assets is reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The net present value of the lease liability is measured at the discounted value of the lease
payments. The liability includes payments to be made in optional periods if it is reasonably
certain that we will exercise an option to extend the lease, or that we will not exercise an
option to terminate the lease. The lease payments comprise the following:
•
•
Fixed payments (including in substance fixed payments), less any lease incentives
Variable lease payments that depend on an index or a rate
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
117
•
•
•
The exercise price of a purchase option if it is reasonably certain that the option will be
exercised
Payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising an option to terminate the lease; and
Amounts expected to be payable under residual value guarantees
recoverable amount, an impairment loss is recognized in the statement of income on the
functional level of the asset impaired. The assessment for impairment is performed at the
lowest level of assets generating largely independent cash inflows. For goodwill and other
intangible assets with an indefinite life, we have determined this to be at business unit level
(one level below operating segment).
These lease payments are discounted using the interest rate implicit in the lease contract, if
that rate can be readily determined. If that rate cannot be readily determined, the
incremental borrowing rate is used. We determine our incremental borrowing rates by
obtaining interest rates from various external financing sources and make certain
adjustments to reflect the term of the lease and type of the asset leased. At the lease
commencement dates, we assess whether it is reasonably certain that we will exercise the
extension options. We reassess whether it is reasonably certain that we will exercise the
options, if there is a significant event or significant change in circumstances within our
control.
At the commencement date, we assess whether it is reasonably certain that:
•
•
•
An option to extend is exercised; or
An option to purchase is exercised; or
An option to terminate the lease is not exercised
In making these assessments, all relevant facts and circumstances that create an economic
incentive for us to exercise, or not to exercise, the option, including any expected changes
in facts and circumstances from the commencement date until the exercise date of the
option, are considered.
Short-term leases and leases of low-value assets
We do not record right-of-use assets and lease liabilities on the balance sheet for leases of
low-value assets and short-term leases. We recognize the lease payments associated with
these leases as an expense on a straight-line basis over the lease term.
Except for goodwill, we reverse impairment losses in the statement of income if and to the
extent we have identified a change in estimates used to determine the recoverable amount.
Associates (Note 13)
Associates are accounted for using the equity method and are initially recognized at cost.
The Consolidated financial statements include our share of the income and expenses of the
associates, whereby the result is determined using our accounting principles. When the
share of losses exceeds the interest in the investee, the carrying amount is reduced to nil
and recognition of further losses is discontinued, unless we have further legal or
constructive obligations.
Inventories (Note 15)
Inventories are measured at the lower of cost and net realizable value. Costs of inventories
comprise all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to the present location and condition. The costs of inventories are determined
using weighted average cost.
Provisions (Note 19)
Impairments (Note 10, 11, 12)
We assess the carrying value of intangible assets, property, plant and equipment and right-
of-use assets whenever events or changes in circumstances indicate that the carrying value
of an asset may not be recoverable as a result of e.g. changes in cash flow forecasts,
damages, market developments or environmental and climate change risks. In addition, for
goodwill and other intangible assets with an indefinite useful life, the carrying value is
reviewed at least annually or when circumstances indicate the carrying amount may be
impaired. If the carrying value of an asset or its cash-generating unit exceeds its estimated
We recognize provisions when a present legal or constructive obligation as a result of a
past event exists, it is probable that an outflow of economic benefits is required to settle the
obligation and the amount can be reliably estimated. Provisions are measured at net
present value. The increase of provisions as a result of the passage of time is recognized in
the statement of income under financing income and expenses.
Provisions for restructuring of activities are recognized when a detailed and formal
restructuring plan has been approved, and the restructuring has either commenced or has
been announced publicly. We do not provide for future operating costs.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
118
Financial instruments
Classification
All assets are measured at amortized cost, fair value through profit or loss or fair value
through other comprehensive income. Financial assets are classified according to a model
based on:
•
•
A contractual cash flow characteristics test
A business model dictating how the reporting entity manages its financial assets in
order to generate cash flows as either:
1. Hold to collect contractual cash flows
2. Collect contractual cash flows and sell
3. Neither 1 or 2
Election of the fair value option in some specific cases in order to eliminate an
accounting mismatch
•
The classification of a financial asset is determined at initial recognition, but if certain
conditions are met, an asset might be subject to reclassification.
Valuation and impairment
Financial assets are assessed for impairment either according to the general approach or a
simplified approach.
The calculation of impairment under the general approach uses the following stages:
•
12-month expected credit losses, taking into account possible default events within
one year
Lifetime expected credit losses in case of an increase in credit risk, through recognition
of expected credit losses over the remaining life of the exposure
Lifetime expected credit losses, where interest is calculated on the net amount of the
receivables less impairment loss
•
•
In all above stages, the impairment calculation used is based on external credit ratings of
involved parties or default rates published by well-known credit risk agencies.
The financial assets included in the general impairment approach are long-term loans and
other long-term receivables.
The calculation of impairment under the simplified approach requires recognition of lifetime
expected credit loss (no tracking of changes in credit risk). The financial assets included in
the simplified impairment approach are trade receivables and the remaining financial assets.
AkzoNobel Report 2023
Measurement
Regular purchases and sales of financial assets and liabilities are recognized on trade date.
The initial measurement of all financial instruments is at fair value. Except for derivatives and
cash and cash equivalents, the initial measurement of financial instruments is adjusted for
directly attributable transaction costs.
Derivative financial instruments (Note 26)
Derivative financial instruments are recognized at fair value on the balance sheet. Fair values
are derived from market prices and quotes from dealers and brokers or are estimated using
observable market inputs. When determining fair values, credit risk for our contract party,
as well as for AkzoNobel, is taken into account.
Changes in fair value are recognized in the statement of income, unless cash flow hedge
accounting or net investment hedge accounting is applied. In those cases, the effective part
of the fair value changes is deferred in other comprehensive income and released to the
related specific lines in the statement of income or balance sheet at the same time as the
hedged item.
Financial non-current assets (Note 14) and Trade and other
receivables (Note 16)
Loans and receivables are measured at amortized cost, using the effective interest method,
less any impairment losses. Positions are netted, if there is an intention to set off and when
legally enforceable.
Cash and cash equivalents and short-term investments
(Note 20)
Cash and cash equivalents and short-term investments are measured at fair value. Cash
and cash equivalents include all cash balances and other investments that are directly
convertible into known amounts of cash. Changes in fair values are included in financing
income and expenses.
Long-term and Short-term borrowings (Note 20, 26) and
Trade and other payables (Note 21)
Long-term and short-term borrowings, as well as trade and other payables, are measured
at amortized cost, using the effective interest rate method. The interest expense on
borrowings is included in financing income and expenses. The fair value of borrowings,
used for disclosure purposes, is determined based on listed market price, if available. If a
listed market price is not available, the fair value is calculated based on the present value of
principal and interest cash flows, discounted at the interest rate at the reporting date,
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
119
considering AkzoNobel’s credit risk. Positions are netted, if there is an intention to set off
and when legally enforceable.
New IFRS accounting standards
IFRS standards and interpretations thereof not yet in force, which may apply to our
Consolidated financial statements for 2024 and beyond, have been assessed for their
potential impact.
These include, among others, amendments to IAS 1 "Classification of Liabilities as Current
or Non-current" and "Non-current Liabilities with Covenants", amendments to IFRS 16
"Lease Liability in Sale and Leaseback", amendments to IAS 7 and IFRS 7 "Supplier
Finance Arrangements", amendments to IAS 21 "Lack of Exchangeability" and
amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture". These changes are not expected to have a material
effect on AkzoNobel’s Consolidated financial statements.
Note 2: Scope of consolidation
Material subsidiaries
The Consolidated financial statements comprise the assets, liabilities, income and expenses
of 238 legal entities. We consider legal entities material when they represent, for at least
two subsequent years, more than 5% of either revenue or operating income. Material
subsidiaries included in the table below are fully owned at year-end 2023, except for Akzo
Nobel India Limited (74.76% owned by AkzoNobel). Refer to Note 17 Group equity for an
overview of non-controlling interests.
Material subsidiaries related to continuing operations
Legal entity
Akzo Nobel Coatings Inc.
Akzo Nobel Paints (Shanghai) Co Ltd.
Akzo Nobel India Limited
Imperial Chemical Industries Limited
Principal place of business
US
China
India
UK
Akzo Nobel Decorative Coatings B.V.
The Netherlands
Akzo Nobel Coatings SPA
Akzo Nobel Ltda
Italy
Brazil
AkzoNobel Report 2023
Acquisitions
On August 1, 2023, AkzoNobel acquired 100% of the shares of Valspar Coatings Holding
Co. Ltd., Hong Kong (hereafter: "the Huarun business") for €72 million. The acquisition
strengthens our position in China. It will allow us further market segmentation and reinforce
our position outside of the premium segment.
The provisional purchase price allocation resulted in €32 million of goodwill (non-deductible
for tax purposes), €28 million of other intangible assets (of which €13 million relates to
brands which have finite useful lives) and €42 million other fixed and current assets,
excluding deferred taxes. Revenue of the Huarun business over 2023 amounted to €66
million. Since its acquisition, the Huarun business contributed €32 million to AkzoNobel's
consolidated revenues.
The goodwill is mainly attributable to synergies expected to be achieved from integrating
the acquired business into the group. The purchase price allocation is provisional due to the
limited time between the date of acquisition and the reporting date. The purchase price
allocation will be finalized before August 1, 2024. No material changes from the current
purchase price allocation are expected. The Huarun business has been integrated in
business unit Decorative Paints China and North Asia.
On April 22, 2022, AkzoNobel acquired 100% of the shares of Colombia-based paints and
coatings company Grupo Orbis S.A. (Grupo Orbis) for €566 million. The acquisition
strengthens our position in Latin America.
Based on the final purchase price allocation, the transaction resulted in €267 million of
goodwill, non-deductible for tax purposes (2022: €262 million), €257 million of other
intangible assets (2022: €259 million), €120 million of property, plant and equipment (2022:
€121 million) and €199 million other fixed and current assets (2022: €202 million).
The goodwill is mainly attributable to synergies expected to be achieved from integrating
the company into the group. The paints business of Grupo Orbis has been integrated in
business unit Decorative Paints Latin America. The coatings businesses have been
integrated in the respective Performance Coatings business units in 2023. In 2022, these
businesses were temporarily reported in business unit Performance Coatings Other.
On December 1, 2022, we acquired the wheel liquid coatings business of Lankwitzer
Lackfabrik GmbH for €36 million in an asset deal. The final purchase price allocation
resulted in €5 million of goodwill, deductible for tax purposes (2022: €7 million), €20 million
of other intangible assets (2022: €17 million) and €13 million other fixed and current assets
(2022: €14 million). The goodwill is mainly attributable to synergies expected to be achieved
from integrating the acquired business into the group. This business has been integrated in
business unit Powder Coatings.
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
120
Recognized fair values at acquisition
in € millions
Other intangibles
Property, plant and equipment
Right of use assets
Inventories
Trade and other receivables
Cash and cash equivalents
Provisions
Deferred tax assets/(liabilities)
Trade and other payables
Net identifiable assets and liabilities
Goodwill
Purchase consideration
Cash and cash equivalents acquired
To be received in 2024 and later years
Net cash outflow2
Huarun
business
Other1
Total 2023
28
7
15
2
12
6
(1)
(10)
(19)
40
32
72
(6)
—
66
10
(1)
—
(1)
(1)
—
(1)
1
—
7
2
9
—
(1)
8
38
6
15
1
11
6
(2)
(9)
(19)
47
34
81
(6)
(1)
74
1 Contains the final adjustments to the Grupo Orbis and Lankwitzer purchase price allocation.
2 Note that 'Acquisition of consolidated companies, net of cash acquired' in the Consolidated statement of cash flows further
contains €40 million related to the previously anticipated acquisition of Kansai Paints Africa.
Divestments
In 2023 and 2022, no divestments occurred, other than property divestments. Please refer
to Note 3 Segment information for more details on the property divestments.
Note 3: Segment information
In presenting and discussing segmental operating results AkzoNobel uses two operational
segments, Decorative Paints and Performance Coatings. Items which are not allocated to
either one of these segments, mainly comprise of corporate assets and corporate costs
and are reported in “Corporate and other”.
Decorative Paints
We provide decorative paints to both the professional and the do-it-yourself markets. We
supply a variety of quality products for every situation and surface, including paints,
lacquers and varnishes. We also offer a range of mixing machines and color concepts for
the building and renovation industry.
The business units in the operating segment Decorative Paints are set up regionally, as the
paints business is managed per region. Refer to Note 4 Revenue for a disaggregation of
revenues per region.
Performance Coatings
We are a supplier of performance coatings that protect and enhance ships, cars, aircraft,
yachts and architectural components (structural steel, building products, flooring),
consumer goods (mobile devices, appliances, beverage cans, furniture) and oil and gas
facilities. The business units in the operating segment Performance Coatings are set up per
product/end market as the segment is managed based on product/end market
combinations. Refer to Note 4 Revenue for a disaggregation of revenues per product/end
market.
Due to the integration of all resins activities in Latin America into the Industrial Coatings
business unit, these activities have been reallocated from Decorative Paints to Performance
Coatings. The 2022 comparative figures have been updated to allow proper comparison.
The tables in this Note include Alternative Performance Measures (APMs). For further
information, refer to the section Alternative Performance Measures in this Note.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
121
Information per reportable segment
in € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Revenue (third
parties)3
Amortization
and
depreciation3
Operating
income3
Identified
items1,3
Adjusted
operating
income1,3
EBITDA1,3
Adjusted
EBITDA1,3
ROS%1,2,3
OPI margin
%1,2,3
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
4,344 4,300
(154)
(145)
388
500
(5)
—
393
500
542
645
548
6,499 6,368
(171)
(170)
448
698
3
—
(43)
(42)
(128)
(169)
(49)
(27)
13
497
685
619
868
668
(58)
(101)
(111)
(85)
(127)
(59)
(70)
645
854
9.0
7.6
11.6
10.8
8.9
6.9
11.6
11.0
10,846 10,668
(368)
(357)
708 1,029
(81)
(45)
789 1,074 1,076 1,386 1,157 1,429
7.3
10.1
6.5
9.6
1 Refer to the glossary for definitions of the APMs.
2 ROS% and OPI margin for Corporate and other is not shown, as this is not meaningful.
3 Revenue, operating income and adjusted operating income (and related measures) of the segments for 2022 have been updated to reflect changes in the financial reporting structure.
Information per reportable segment
Invested capital
Total assets
Total liabilities
Capital
expenditures1
2022
2023
2022
2023
2022
2023
2022
2023
3,604
3,650
5,890
5,835
1,581
1,604
3,950
3,641
6,270
6,294
2,083
2,213
581
555
2,581
2,429
6,529
6,195
8,135
7,846 14,741 14,558 10,193 10,012
91
167
34
292
99
165
22
286
ROI%1,2,3
2022
10.7
12.8
2023
13.3
18.4
9.8
13.0
Revenue by region
of destination
Intangible assets
and property, plant
and equipment
Invested capital
Capital
expenditures
2022
2023
2022
2023
2022
2023
2022
2023
319
315
1,223
1,210
1,900
1,984
4,714
4,672
1,753
1,730
2,679
2,474
1,728
1,719
1,162
1,165
1,371
1,304
1,416
1,377
1,298
1,281
526
648
728
523
631
965
677
890
993
597
775
816
1,024
1,023
45
95
40
54
42
16
34
102
36
63
29
22
10,846 10,668
6,040
6,075
8,135
7,846
292
286
in € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
1 Refer to the glossary for the definition of capital expenditures and ROI%.
2 ROI% for Corporate and other is not shown, as this is not meaningful.
3 ROI% for 2022 for the segments has been updated to reflect changes in the financial reporting structure.
Regional information
in € millions
The Netherlands
Other EMEA countries
North Asia
South Asia Pacific
North America
Latin America
Total
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
122
Alternative Performance Measures
Reconciliations of APMs to the nearest IFRS measures
In presenting and discussing AkzoNobel’s (segmental) operating results, management uses
certain Alternative Performance Measures not defined by IFRS, which exclude the so-called
identified items. ldentified items are special charges and benefits, results on acquisitions
and divestments, major restructuring and impairment charges, and charges and benefits
related to major legal, environmental and tax cases. These Alternative Performance
Measures should not be viewed in isolation as alternatives to the equivalent IFRS measures
and should be used as supplementary information in conjunction with the most directly
comparable IFRS measures. Alternative Performance Measures do not have a standardized
meaning under IFRS and therefore may not be comparable to similar measures presented
by other companies. Where a non-financial measure is used to calculate an operational or
statistical ratio, this is also considered an alternative performance measure.
A reconciliation of the Alternative Performance Measures to the most directly comparable
IFRS measures can be found in the tables on this page and the next pages.
Identified items
Restructuring related costs
Restructuring related costs primarily relate to costs for accruals for certain employee
benefits and for other costs which are directly associated with plans to exit or cease
specific activities and closing down of facilities.
Property divestments
Property divestments in 2023 primarily relate to the gains on the divestment of the
Offenbach site in Germany and the Bangkok site in Thailand.
Adjustments to interest
Adjustments to interest in 2023 mainly related to the wind down of the cash flow hedges
related to the previously anticipated acquisition of Kansai Paints Africa. Refer to Note 26
Financial risk management for more details.
In 2022, interest income of €10 million was recognized related to the UK ACT case. The UK
ACT case is a group litigation case the company participates in (“Franked Investment
Income litigation/case”; filed in 2003) in order to seek recovery of Advance Corporation Tax.
Adjustments to income tax
In 2023, adjustments to income tax amounted to a net tax charge of €13 million, which
mainly related to the tax impact on the identified items in interest and operating income. In
2022 this tax impact on identified items in interest and operating income of €18 million was
partly offset by a €13 million tax charge related to the UK ACT case.
AkzoNobel Report 2023
Alternative Performance Measures
in € millions
Continu-
ing
operations
Discon-
tinued
operations
2022
Total
Continu-
ing
operations
Discon-
tinued
operations
2023
Total
Operating income
708
—
708
1,029
—
1,029
APM adjustments to
operating income
Restructuring related costs
Property divestments
Acquisition related costs
Other
Total APM adjustments
(Identified items) to
operating income
80
—
9
(8)
—
—
—
—
80
—
9
(8)
89
(63)
15
4
—
—
—
—
89
(63)
15
4
81
—
81
45
—
45
Adjusted operating income
789
—
789
1,074
—
1,074
Profit for the period
attributable to shareholders
of the company
Adjustments to operating
income
Adjustments to interest
Adjustments to income tax
Total APM adjustments
Adjusted profit for the
period attributable to
shareholders of the
company
362
(10)
352
447
(5)
442
81
(10)
(5)
66
—
—
—
—
81
(10)
(5)
66
45
44
(13)
76
—
—
—
—
45
44
(13)
76
428
(10)
418
523
(5)
518
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Adjusted operating income, OPI margin and ROS%
EBITDA*
123
2023
EBITDA
645
868
(127)
2022
Operating
income
Depreciation
and
amortization
EBITDA
Operating
income
Depreciation
and
amortization
388
448
(128)
708
(154)
(171)
(43)
542
619
(85)
500
698
(169)
(145)
(170)
(42)
(368)
1,076
1,029
(357)
1,386
2022
2023
4,344
6,499
3
4,300
6,368
—
10,846
10,668
in € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
* Refer to the glossary for definitions of the APMs.
Adjusted EBITDA*
in € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Adjusted
operating
income
393
497
(101)
789
2022
2023
Depreciation
and
amortization
excluding
Identified
items
Adjusted
EBITDA
Adjusted
operating
income
Depreciation
and
amortization
excluding
Identified
items
Adjusted
EBITDA
(155)
(171)
(42)
548
668
(59)
500
685
(111)
(145)
(169)
(41)
645
854
(70)
(368)
1,157
1,074
(355)
1,429
* Refer to the glossary for definitions of the APMs.
Leverage ratio is calculated as net debt/EBITDA. For the calculation of net debt, refer to
Note 20 Net debt. Further information on the leverage ratio is included in Note 26 Financial
risk management, in the paragraph on capital risk management.
388
448
(128)
708
(5)
(49)
(27)
(81)
393
497
(101)
789
8.9
6.9
6.5
9.0
7.6
7.3
500
698
(169)
1,029
—
13
(58)
(45)
500
685
(111)
1,074
11.6
11.0
9.6
11.6
10.8
10.1
in € millions
Revenue from third parties1
Decorative Paints
Performance Coatings
Corporate and other
Total
Operating income1
Decorative Paints
Performance Coatings
Corporate and other
Total
Total APM adjustments (Identified items) in Operating income1,2
Decorative Paints
Performance Coatings
Corporate and other
Total
Adjusted operating income1,2
Decorative Paints
Performance Coatings
Corporate and other
Total
OPI margin%1.2,3
Decorative Paints
Performance Coatings
Corporate and other
Total
ROS%1,2,3
Decorative Paints
Performance Coatings
Corporate and other
Total
1 Revenue, operating income and adjusted operating income (and related measures) for 2022 of the segments have been updated to
reflect changes in the financial reporting structure.
2 Refer to the glossary for definitions of the APMs.
3 OPI margin and ROS% for Corporate and other is not shown, as this is not meaningful.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
124
2022
2023
in € millions
Free cash flow
Net cash generated from/(used for) operating activities
2022
263
(292)
(29)
2023
1,126
(286)
840
Capital expenditures
Free cash flow
Note 4: Revenue
3,677
3,895
490
8,062
393
497
(101)
789
10.7
12.8
9.8
3,755
3,725
753
8,233
500
685
(111)
1,074
13.3
18.4
13.0
AkzoNobel derives revenue from the transfer of goods and services at a point in time and
over time, in the major product lines and geographical regions as disclosed in the table in
this Note.
For the receivables, which are included in Trade and other receivables, reference is made to
Note 16 Trade and other receivables.
As at December 31, 2023, and at December 31, 2022, no significant contract assets were
recognized.
As at December 31, 2023, the amount of contract liabilities deferred to be recognized over
time in 2024 was €4 million. These contract liabilities primarily relate to shipping, training
and certain technical services, for which revenue is recognized over time. The amount of €4
million included in contract liabilities at the beginning of the period has been recognized as
revenue during the year 2023 (2022: €3 million).
Financial integration Grupo Orbis
In 2022, as from the moment of acquisition (April 2022), the Grupo Orbis results related to
Performance Coatings were included in business unit Performance Coatings Other. In
2023, the Grupo Orbis Performance Coatings results have been included in the respective
business units in the Performance Coatings segment. The 2022 comparative figures have
been updated to allow for proper comparison.
ROI%1
in € millions
Average invested capital1
Decorative Paints
Performance Coatings
Corporate and other
Total
Adjusted operating income1, 2
Decorative Paints
Performance Coatings
Corporate and other
Total
ROI%3
Decorative Paints
Performance Coatings
Corporate and other3
Total
1 Refer to the glossary for definitions of the APMs.
2 Operating income and adjusted operating income (and related measures) for 2022 for the segments have been updated to reflect
changes in the financial reporting structure.
3 ROI% for Corporate and other is not shown, as this is not meaningful.
Adjusted earnings per share*
in € millions
Profit for the period attributable to shareholders of the
company from continuing operations
APM adjustments to operating income
APM adjustment to interest
APM adjustment to income tax
Non-controlling interests
Adjusted profit from continuing operations attributable
to shareholders of the company*
Weighted average number of shares (in millions)
Adjusted earnings per share from continuing operations (in €)
* Refer to the glossary for definitions of the APMs.
2022
388
81
(10)
(5)
(26)
428
174.7
2.45
2023
488
45
44
(13)
(41)
523
170.6
3.07
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
125
Decorative Paints
Performance Coatings
2022
2023
2022
2023
2022
Other
2023
Revenue disaggregation
in € millions
Primary geographical markets - revenue from third parties
The Netherlands
Other EMEA countries
North Asia
South Asia Pacific
North America
Latin America*
Total
206
2,199
564
608
—
767
214
2,199
543
564
—
780
4,344
4,300
Major goods/service lines - revenue from third parties
Decorative Paints Europe, Middle East and Africa
2,405
2,413
Decorative Paints Latin America*
Decorative Paints China and North Asia
Decorative Paints South East and South Asia
Powder Coatings*
Marine and Protective Coatings*
Automotive and Specialty Coatings*
Industrial Coatings*
Corporate and other
Total
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total
767
564
608
—
—
—
—
—
780
543
564
—
—
—
—
—
4,344
4,300
4,257
87
4,344
4,101
199
4,300
110
2,515
1,164
763
1,416
531
6,499
—
—
—
—
1,385
1,389
1,407
2,318
—
6,499
6,285
214
6,499
101
2,473
1,177
740
1,379
498
6,368
—
—
—
—
1,377
1,482
1,422
2,087
—
6,368
6,288
80
6,368
3
—
—
—
—
—
3
—
—
—
—
—
—
—
—
3
3
—
3
3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2022
319
4,714
1,728
1,371
1,416
1,298
Total
2023
315
4,672
1,720
1,304
1,379
1,278
10,846
10,668
2,405
2,413
767
564
608
1,385
1,389
1,407
2,318
3
780
543
564
1,377
1,482
1,422
2,087
—
10,846
10,668
10,542
10,389
304
279
10,846
10,668
* Revenues for 2022 of the business units and the segments have been updated to reflect changes in the financial reporting structure; updates reflect the financial integration of Grupo Orbis into the respective business units in Performance Coatings, and the integration of all
Resins activities in Latin America into Industrial Coatings (refer to Note 3 Segment information).
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
126
Note 5: Operating income
Operating income
Operating income increased 45% to €1,029 million (2022:
€708 million), with a rebound in gross margins more than
offsetting operating cost inflation. OPI margin improved to
9.6% (2022: 6.5%).
Amortization
Depreciation
Purchases and
other costs
(1)
(52)
(22)
(5)
—
(80)
(150)
(94)
(19)
(14)
—
(277)
(5,733)
(1,210)
(328)
(65)
62
(7,274)
Amortization
Depreciation
Purchases and
other costs
(1)
(57)
(24)
(5)
—
(87)
(152)
(93)
(24)
(12)
—
(281)
(6,220)
(1,193)
(338)
(59)
—
Total
(6,434)
(2,347)
(648)
(270)
60
(9,639)
Total
(6,923)
(2,308)
(649)
(258)
—
(7,810)
(10,138)
Employee
benefits
(550)
(991)
(279)
(186)
(2)
(2,008)
Employee
benefits
(550)
(965)
(263)
(182)
—
(1,960)
Costs by nature 2023
in € millions
Cost of sales
Selling and distribution expenses
General and administrative expenses
Research and development expenses
Other results
Total
Costs by nature 2022
in € millions
Cost of sales
Selling and distribution expenses
General and administrative expenses
Research and development expenses
Other results
Total
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
127
Note 6: Employee benefits
Share-based compensation
Salaries, wages and other employee benefits in operating income
in € millions
Salaries and wages
Post-retirement cost
Other social charges
Total
Average number of employees total AkzoNobel
Average number during the year
Decorative Paints
Performance Coatings
Corporate and other
Total
Average number of employees in the Netherlands
Average number during the year
Decorative Paints
Performance Coatings
Corporate and other
Total
Number of employees
At year-end
Decorative Paints
Performance Coatings
Corporate and other
Total
2022
(1,517)
(146)
(297)
(1,960)
2022
13,800
18,000
3,300
35,100
2022
600
1,100
700
2,400
2022
14,000
17,900
3,300
35,200
2023
(1,573)
(138)
(297)
(2,008)
2023
14,200
17,400
3,300
34,900
2023
600
1,100
700
2,400
2023
14,300
17,500
3,400
35,200
Share-based compensation relates to the equity-settled performance-related share plan
and the restricted share plans, as well as the share-matching plan. Charges recognized in
the 2023 statement of income for share-based compensation amounted to €18 million and
are included in salaries and wages (2022: €16 million).
Performance-related and restricted share plans
Under the performance-related share plan and the restricted share plans, a number of
conditional shares are granted to the members of the Board of Management, members of
the Executive Committee, executives and certain other employee categories each year. The
number of participants of the performance-related share plan and the restricted share plans
at year-end 2023 was 666 (2022: 616). The shares of the performance-related and
restricted share plan series 2020-2022 have vested and were delivered to the participants
in 2023.
The performance targets for the conditional grant of performance-related shares of the
current plans for the Board of Management and the Executive Committee (series
2021-2023, 2022-2024 and 2023-2025) are linked to revenue growth (20%), adjusted
EBITDA (40%), ROI ( 20%), and Environmental, Social and Governance (ESG) KPIs (20%).
A two-year holding restriction after vesting applies.
The plans for the executives and certain non-executive employee categories are restricted
share plans without any performance conditions, whereby the conditional grant of shares
will vest upon the condition that they remain in service with the company during the three-
year vesting period. A one-year holding restriction after vesting applies for the executives.
The conditional shares of the 2021-2023 performance share plan for the AkzoNobel
participants vested for 12.30% (series 2020-2022: 0%), including dividend shares of 7.42%
(series 2020-2022: 7.33%), the final vesting percentage amounted to 13.21% (series
2020-2022: 0%).
The share price of a common AkzoNobel share at year end 2023 amounted to €74.82
(2022: €62.56).
The average number of employees working outside the Netherlands was 32,500 (2022:
32,700). In 2023, the number of employees remained stable at 35,200 people (year-end
2022: 35,200 people). Acquisitions in 2023 added around 200 people.
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
128
Share-matching plan
The members of the Board of Management and the members of the Executive Committee
are eligible to participate in the share-matching plan. Under certain conditions, members
who invest part of their short-term incentive payment in AkzoNobel shares may have such
shares matched by the company one-on-one. During 2023, no potential matching shares
were matched as the members of the Board of Management and the members of the
Executive Committee were not eligible for matching shares on the 2020 series. However, in
2023, the 2,708 potential matching shares that were granted to Thierry Vanlancker were
pro-rated, resulting in 903 potential matching shares. These shares were matched upon
termination of the management agreement in April 2023. In 2023, the members of the
Board of Management and the members of the Executive Committee invested part of their
2022 short-term incentive in AkzoNobel shares, leading to 2,545 potential matching shares.
The total number of matching shares outstanding per December 31, 2023, is 3,626. For an
overview of the matching shares outstanding for the members of the Board of Management
per December 31, 2023, we refer to the Remuneration report.
Fair value of matching shares
The fair value of the matching shares of €68.78 was based on the opening share price on
the investment date of April 26, 2023, being €74.56, discounted for expected dividends
over the holding period (dividend yield: 2.66%).
Fair value of restricted and performance-related shares
The fair value of the restricted shares of the 2023-2025 grant to executives, amounting to
€68.78, is based on the opening share price on April 26, 2023, of €74.56 and the expected
dividend yield of 2.66%.
The fair value of the restricted shares of the 2023-2025 grant to non-executives, amounting
to €69.00, is based on the opening share price on July 3, 2023 of € 74.78 and the
expected dividend yield of 2.65%.
The fair value of the performance-related 2023-2025 grant, based on the opening share
price on February 23, 2023, amounts to €69.26. For a later grant under this program, this
was based on the opening share price on July 3, 2023, of €74.78.
Fair value performance-related shares in €
Series
2020 - 2022
2021 - 2023
Opening share
price per:
April 21, 20201
Market
condition
(TSR)5
Fair
Value
Non-market
based
performance
conditions6
Share
price
Expected
volatility
Risk free
interest
rate
53.42
42.95
63.88
63.88
21.42 %
(0.33) %
April 22, 20212
103.20
2022 - 2024
February 23, 2022
88.28
2022 - 2024
October 3, 20223
57.70
2023 - 2025
February 23, 2023
69.26
2023 - 2025
July 3, 20234
74.78
NA
NA
NA
NA
NA
103.20
103.20
88.28
88.28
57.70
57.70
69.26
69.26
74.78
74.78
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
1 Date on which the Supervisory Board approved the use of the average share price calculation method to determine the number of
shares granted.
2 Date of the AGM at which the new LTI performance criteria for the Board of Management were approved.
3 Date on which Mr. Poux-Guillaume started working for AkzoNobel.
4 Date on which Mr. Sohet started working for AkzoNobel.
5 50% for the 2020-2022 grant, no longer applicable as from the 2021-2023 grant.
6 50% for the 2020-2022 grant, 100% as from the 2021-2023 grant.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
129
Share plans of AkzoNobel employees
Share plan
2020 – 2022 Restricted Share Plan E1
2020 – 2022 Performance Share Plan2
2020 – 2022 Restricted Share Plan NE1
2021 – 2023 Restricted Share Plan E1
Performance/
Vesting
period
Award
date
Vesting
date
End of
holding
period
Balance at
January 1,
2023
Awarded
in 2023
Vested in
2023
Forfeited
in 2023
Dividend
in
2023
Subject to
performance
condition
Unvested
in 2023
Subject to
holding
period
Balance at
December
31, 2023
3 years
1/1/2020
1/1/2023
1/1/2024
136,401
—
(136,401)
3 years
1/1/2020
1/1/2023
1/1/2025
10,972
—
(10,972)
3 years
1/4/2020
1/4/2023
NA
5,680
—
(5,680)
—
—
—
3 years
1/4/2021
1/4/2024
1/4/2025
154,950
240
(10,127)
(14,208)
—
—
—
—
NA
—
NA
—
136,401
—
—
10,972
—
—
—
—
NA
130,855
130,855
130,855
2021 – 2023 Performance Share Plan
3 years
1/1/2021
1/1/2024
1/1/2026
61,689
2021 – 2023 Restricted Share Plan NE1
3 years
1/4/2021
1/4/2024
NA
25,580
—
—
(480)
(1,080)
2022 – 2024 Restricted Share Plan E1
3 years
1/4/2022
1/4/2025
1/4/2026
170,994
240
(6,777)
(21,032)
2022 – 2024 Performance Share Plan
3 years
1/1/2022
1/1/2025
1/1/2027
87,008
2022 – 2024 Restricted Share Plan NE1
3 years
1/4/2022
1/4/2025
NA
47,182
—
390
(335)
(3,020)
2023 – 2025 Restricted Share Plan E1
3 years
1/4/2023
1/4/2026
1/4/2027
—
247,214
(443)
(21,026)
—
(54,716)
1,690
8,663
8,663
8,663
8,663
—
—
NA
24,020
—
24,020
NA
143,425
143,425
143,425
—
(25,946)
985
62,047
62,047
62,047
62,047
—
—
NA
44,217
—
44,217
NA
225,745
225,745
225,745
2023 – 2025 Performance Share Plan
3 years
1/1/2023
1/1/2026
1/1/2028
—
108,147
2023 – 2025 Restricted Share Plan NE1
3 years
1/4/2023
1/4/2026
NA
—
64,050
—
—
(6,147)
2,795
104,795
104,795
104,795
104,795
(1,025)
—
NA
63,025
—
63,025
Total
700,456
420,281
(171,215)
(148,200)
5,470
175,505
806,792
822,903
806,792
1 E means executive plan; NE means non-executive plan.
2 Shares vested since AkzoNobel is legally bound to an agreement with a former member of the Executive Committee regarding the vesting of shares for this individual, as well as a
conditional share grant awarded to new Executive Committee ,members at the time of their hiring, who received these grants as buy-out from the contract at their previous employer.
Note 7: Financing income and expenses
Financing income and expenses
in € millions
Interest on net debt
Financing income
Financing expenses
Net interest on net debt
Other interest
Financing income related to post- retirement benefits
Interest on provisions
Exchange rate results
Hyperinflation: net gain/(loss) on monetary position
Other items
Net other financing credit/(charges)
Total financing income and expenses
AkzoNobel Report 2023
2022
2023
19
(106)
(87)
18
17
(65)
(20)
13
(37)
(124)
69
(192)
(123)
33
(1)
(128)
(46)
(7)
(149)
(272)
•
Net financing expenses for the year were €272 million (2022: €124 million). Significant
variances are:
• Net interest on net debt increased by €36 million to a €123 million charge (2022: €87
million); higher interest rates impacted both financing income and financing expenses
Financing income related to post-retirement benefits increased by €15 million to €33
million (2022: €18 million) mainly as a result of higher discount rates. Interest income
from financial assets measured at amortized cost (including the loan to Pension Fund
APF in the Netherlands) amounted to approximately €5 million in both years. The
remainder was generated by financial assets measured at fair value through profit and
loss
Interest income on provisions decreased by €18 million to negative €1 million (2022:
€17 million) due to the impact on discounting from changes in discount rates
Exchange rate results were negative €128 million (2022: negative €65 million) and
contain €36 million negative result on cash flow hedging contracts, related to the
previously anticipated acquisition of Kansai Paints Africa (refer to Note 26 Financial risk
management for more details)
•
•
• Hyperinflation: the net loss on monetary position increased by €26 million to €46 million
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
130
• Other items decreased by €20 million, mainly due to €10 million interest income from
the UK ACT case which was included in 2022 (refer to Note 3 Segment information for
more details)
The average interest rate used for capitalized interest was 2.1% (2022: 1.7%). Capitalized
interest was negligible in both 2023 and 2022. The average interest rate on total debt was
3.2% (2022: 2.1%).
Impact hyperinflation accounting
We have applied IAS 29 "Financial Reporting in Hyperinflationary Economies" for Türkiye as
from January 1, 2022. For Argentina, hyperinflation accounting was already applied as from
January 1, 2018. In addition, and in line with IAS 21 "The Effects of Changes in Foreign
Exchange Rates", end of period rates are used to translate both the balance sheet and the
statement of income into euros.
For Türkiye, the revaluation effect on the non-monetary assets at January 1, 2022, was €16
million positive (after taxes), recorded as a restatement to opening shareholders’ equity. In
addition, the opening balance of intangible assets has been restated by €1 million (refer to
Note 10 Intangible assets) and the opening balance of property, plant and equipment has
been restated by €15 million (refer to Note 11 Property, plant and equipment). Refer to
Note 8 Income tax for the related opening balance impact on deferred taxes.
The impact of the application of hyperinflation accounting and the use of end of period
rates to translate the statement of the income statement is shown in the table below.
Note 8: Income tax
Pre-tax income from continuing operations for the year amounted to a profit of €784 million
(2022: €602 million). The net tax charges related to continuing operations are included in
the statement of income as shown in this Note and amount to €296 million (2022: €214
million), leading to an effective tax rate of 37.8% (2022: 35.5%).
Classification of current and deferred tax result
A breakdown into current and deferred tax expenses and a split of the main categories is
provided in the table below. For comparative reasons, this table presents the income tax
expense excluding the impact from discontinued operations. The total deferred tax in the
statement of income including discontinued operations was €9 million (2022: €8 million
income). The total tax charge including discontinued operations was €296 million (2022:
€211 million).
Classification of current and deferred tax result
in € millions
Current tax expense for
The year
Adjustments for previous years
Total current tax expense
Deferred tax expense for
Changes in tax rates
Total deferred tax expense
Total
2022
2023
(198)
(24)
(222)
21
(6)
(7)
8
(214)
(277)
(28)
(305)
57
(47)
(1)
9
(296)
2022
2023
(Derecognition)/recognition of deferred tax assets
Origination and reversal of temporary differences and tax
losses
5
(46)
0
4
(20)
(16)
(62)
(12)
(74)
(63)
(11)
(64)
(54)
17
54
(46)
25
(29)
(48)
(77)
(65)
(12)
Adjustments for prior years in 2023 mainly related to true-ups as a result of tax audits, while
in 2022 in addition a net tax charge of €13 million for the UK ACT case was recorded (refer
to Note 3 Segment information for more details).
Origination and reversal of temporary differences and tax losses is driven, amongst others,
by timing differences between recognition and payments for provisions, timing differences
on depreciation and amortization for tax purposes versus the consolidated financial
statements and tax loss carryforwards utilized against profits of the year or new tax losses
incurred.
The derecognition of deferred tax assets in 2023 mainly related to re-assessments of,
among others, technical tax limitations to deduct interest.
Hyperinflation accounting
in € millions
Revenue
Operating income
Net interest on net debt
Exchange rate results
Hyperinflation: net gain/(loss) on monetary position
Financing income and expenses
Profit before tax
Income tax
Profit for the period
Attributable to
Shareholders of the company
Non-controlling interests
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
131
Effective tax rate reconciliation
In 2023, the effective income tax rate based on the statement of income was 37.8% (2022:
35.5%). A reconciliation between the effective tax rate and the weighted average statutory
income tax rate is provided in the table below. For comparative reasons, this table presents
the effective consolidated tax rate excluding the impact from discontinued operations.
Including these results, the effective consolidated tax rate is 37.8% (2022: 35.8%).
Non-deductible expenses are related to certain non-deductible costs in various countries.
The impact of non-refundable withholding tax on the tax rate is dependent on our relative
share in the profit of subsidiaries in countries that levy withholding tax on dividends and on
the timing of the remittance of such dividends. Based on the Dutch tax system there is a
limited credit for such taxes.
Effective tax rate reconciliation
in %
Corporate tax rate in the Netherlands
Effect of tax rates in other countries
Weighted average statutory income tax rate
Non-taxable income
Non-deductible expenses
Non-refundable withholding taxes
(Recognition)/derecognition of deferred tax assets
Adjustments for prior years
Hyperinflation impact
Deferred tax adjustment due to changes in tax rates
Effective tax rate
2022
25.8
(2.2)
23.6
(2.8)
3.3
2.4
1.0
4.0
2.8
1.2
35.5
2023
25.8
(1.7)
24.1
(2.8)
2.2
1.4
6.0
3.5
3.2
0.2
37.8
Non-taxable income in both 2023 and 2022 was mainly related to R&D credits and the tax
exemption for investments.
Origination of deferred tax assets and liabilities 2023
The derecognition of deferred tax assets in 2023 mainly relates to re-assessments of,
among others, technical tax limitations to deduct interest.
Adjustments for prior years in 2023 mainly related to true-ups as a result of tax audits, while
in 2022 in addition also a net tax charge of €13 million for the UK ACT case was recorded
(refer to Note 3 Segment information for more details).
The net effect of hyperinflation accounting in Argentina and Türkiye combined in 2023 is
3.2% (2022: 2.8%). This mainly relates to the restatement of reserves, which results in a
non-taxable, non-cash impact on the effective tax rate.
Origination of deferred tax assets and liabilities
Deferred tax assets and liabilities originate from temporary differences in various balance
sheet line items, as well as from tax credits and tax loss carryforwards. The tables show the
origination of deferred tax assets and liabilities, and the movements thereof, for the financial
years 2023 and 2022.
in € millions
Intangible assets
Property, plant and equipment
Financial non-current assets
Post-retirement benefit provisions
Other provisions
Other items
Tax credits
Tax loss carryforwards
Deferred tax assets (liabilities)
AkzoNobel Report 2023
Balance at January
1, 2023
Changes in
exchange rate
Recognized in
income
Recognized in
equity / Other
comprehensive
income
Acquisitions
Balance at
December 31, 2023
(521)
57
(272)
76
25
126
206
240
(63)
9
17
(4)
—
(1)
(3)
—
(37)
(19)
(16)
(24)
7
(7)
4
(28)
16
57
9
—
—
22
16
—
(1)
—
—
37
(5)
(1)
—
—
—
(3)
—
—
(9)
(533)
49
(247)
85
28
91
222
260
(45)
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
132
Origination of deferred tax assets and liabilities 2022
in € millions
Intangible assets
Property, plant and equipment*
Financial non-current assets
Post-retirement benefit provisions
Other provisions
Other items*
Tax credits
Tax loss carryforwards
Deferred tax assets (liabilities)
Balance at January
1, 2022
Changes in
exchange rate
Recognized in
income
Recognized in
equity / Other
comprehensive
income
Acquisitions
Balance at
December 31, 2022
(461)
75
(406)
138
28
96
204
237
(89)
23
2
20
3
—
(2)
(1)
(9)
36
—
(3)
(25)
(12)
(3)
36
3
12
8
—
—
139
(53)
—
—
—
—
86
(83)
(17)
—
—
—
(4)
—
—
(104)
(521)
57
(272)
76
25
126
206
240
(63)
* Property, plant and equipment includes an opening balance adjustment of €3 million and other items of €1 million related to the application of IAS 29 "Financial Reporting in Hyperinflationary Economies" in Türkiye. Refer to Note 7 Financing income and expenses for further
details.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
133
The amount of deferred tax assets considered realizable could change if future estimates of
projected taxable income during the carryforward period, or other variables, are revised.
The majority of the amount of the non-current portion of deferred and current taxes will be
recovered or settled after more than 12 months.
In 2023, the assessment of deferred tax asset recoverability on the basis of taxable profit
forecasts resulted in derecognition of deferred tax assets related to non-deductible interest
carried forward. In 2022, the assessment of deferred tax asset recoverability on the basis of
taxable profit forecasts did not result in a significant net derecognition or re-recognition.
At year-end 2023, approximately 70% (2022: approximately 75%) of the recognized
deferred assets concerned the UK, the Netherlands and Germany.
From the total amount of recognized net deferred tax assets, €151 million (2022: €206
million) is related to entities that have suffered a loss in either the current or the previous
year and where utilization is dependent on future taxable profit in excess of the profit arising
from the reversal of existing taxable temporary differences. This assessment is based on
management’s long-term projections and tax planning strategies.
In 2023, deferred tax assets not recognized include €548 million of tax loss carryforwards
and €44 million of non-deductible interest. In 2022, deferred tax assets not recognized fully
related to tax loss carryforwards. The losses in the tables on tax losses carried forward on
the next page are gross amounts, with the tax impact included in the last column of the
table.
A deferred tax liability is recognized for taxable temporary differences related to investments
in subsidiaries, branches and associates and interests in joint arrangements, to the extent
that it is probable that these will reverse in the foreseeable future. The expected net tax
impact of the remaining differences for which no deferred tax liabilities have been
recognized is €47 million (2022: €55 million).
Reconciliation deferred tax assets and liabilities to the balance
sheet
The table provides a reconciliation of the total deferred tax amounts for each of the
originating items to the deferred tax asset and liability positions as included in the balance
sheet.
Deferred tax assets and liabilities per balance sheet item
in € millions
Intangible assets
Property, plant and equipment
Financial non-current assets
Post-retirement benefit provisions
Other provisions
Other items
Tax credits
Tax loss carryforwards
Tax assets/liabilities
Set-off of tax
Net deferred tax positions
December 31, 2022
December 31, 2023
Net
balance
Assets Liabilities
Net
balance
Assets Liabilities
(521)
56
(271)
76
25
125
207
240
(63)
—
(63)
10
124
6
79
34
143
207
240
843
(345)
498
531
(533)
9
68
49
123
277
(247)
3
9
18
—
—
906
(345)
561
85
28
91
222
260
(45)
—
(45)
11
88
38
107
222
260
858
(346)
512
542
74
258
3
10
16
—
—
903
(346)
557
Deferred tax assets recoverability assessment
In assessing the recognition of deferred tax assets, management considers whether it is
probable that some portion or all of the deferred tax assets will be realized. The ultimate
realization of the deferred tax assets is dependent upon the generation of future taxable
income against which the deductible temporary differences, unused tax losses and unused
tax credits can be utilized.
Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income, and tax planning strategies in making this assessment. The projections
used to assess recoverability are, in general, based on a projection of 10 years. Specific
facts and circumstances per country may lead to shorter or longer projection periods being
used. Growth in profitability is projected using GDP growth, adjusting for specific factors
affecting profitability of our operations within the country.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
134
Expiration year of loss carryforwards 2023
in € millions
Total loss carryforwards
Loss carryforwards not recognized in deferred tax assets
Total loss carryforwards recognized
2024
2025
2026
2027
2028
Later
Unlimited
Total
Deferred tax
1
—
1
1
—
1
4
(1)
3
5
(1)
4
76
(1)
75
51
(17)
34
3,009
(2,153)
856
3,147
(2,173)
974
808
(548)
260
Expiration year of loss carryforwards 2022
in € millions
Total loss carryforwards
Loss carryforwards not recognized in deferred tax assets
Total loss carryforwards recognized
2023
2024
2025
2026
2027
Later
Unlimited
Total
Deferred tax
—
—
—
1
(1)
—
1
(1)
—
2
—
2
13
—
13
56
(10)
46
3,014
(2,120)
894
3,087
(2,132)
955
779
(539)
240
Uncertain tax positions
Liabilities for uncertain tax positions are recognized if and to the extent it is probable that
additional taxes will become due, and the amount can be measured reliably.
Our assessments are based on our best estimate of how the tax authorities concerned are
likely to evaluate and respond to the cases in question, taking into account expert advice.
Uncertain tax positions for which liabilities have been recorded, mainly relate to international
transfer pricing and deductibility of expenses.
In certain cases, uncertain tax positions are related to disputes with tax authorities. Such
disputes are usually strongly contested and defended by the company, often assisted by
outside counsel and/or experts. Significant judgment is involved in the determination of
such liabilities. Probability is assessed by applying interpretation of legislation and relevant
case law.
Impact OECD Pillar Two framework
On December 15, 2022, the Council of the EU adopted the Pillar Two directive, which was
subsequently embedded in Dutch law on December 19, 2023. This directive will introduce
a minimum corporate tax rate set at 15% for each jurisdiction in which a company
operates. For AkzoNobel, the new rules will be applicable as of 2024.
In the 2023 financial statements, AkzoNobel applied the exemption for recognizing and
disclosing information about deferred tax assets and liabilities related to Pillar Two income
taxes.
AkzoNobel performed an analysis of the expected impact of the implementation of the
directive for AkzoNobel Group based on historical data. Based on this analysis, the
Transitional CbCR Safe Harbour is expected to be applicable for the majority of jurisdictions
and hence effectively excludes those jurisdictions from the scope of the rules in the initial
years. For the remaining jurisdictions, no material financial impact is anticipated for the
foreseeable future. Due to complexities in applying the Pillar Two legislation as well as the
fact that further guidance on rules and regulations is expected in the coming period, the
company will continue to assess the impact of the Pillar Two legislation on its future
performance.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
135
Income tax recognized in equity
The following table shows income tax items recognized in equity by category.
In 2022, the number of shares for the earnings per share calculation decreased as a result
of share buyback programs; in 2023 there was no impact from share buybacks.
2022
2023
Number of shares
2022
2023
Weighted average number of common shares
Income tax recognized in equity
in € millions
Currency exchange differences on intercompany loans of a
permanent nature
Share-based compensation
Share buyback
Post-retirement benefits
Changes in tax rates
IAS 29 opening balance adjustment
Total
Current tax
Deferred tax
Total
Note 9: Earnings per share
2
(2)
2
86
—
(4)
84
2
82
84
Profit for the period attributable to the shareholders of the company was €442 million
(2022: €352 million).
Profit for the period
in € millions
Profit before tax from continuing operations
Income tax
Profit from continuing operations
Profit for the period attributable to non-controlling interests
Profit for the period from continuing operations
attributable to shareholders of the company
Profit for the period from discontinued operations attributable
to shareholders of the company
Profit for the period attributable to shareholders of the
company
2022
602
(214)
388
(26)
362
(10)
352
AkzoNobel Report 2023
Issued common shares at January 1
181,609,509
170,428,331
Effect of issued common shares during the year
Effect of share buyback program
186,077
(7,060,447)
145,224
—
Shares for basic earnings per share for the year
174,735,139
170,573,555
Effect of dilutive shares
For performance-related and restricted shares
For share-matching plan
575,108
3,251
761,918
3,283
Shares for diluted earnings per share
175,313,498
171,338,756
Earnings per share
in €
Continuing operations
Basic
Diluted
Discontinued operations
Basic
Diluted
Total operations
Basic
Diluted
2022
2023
2.07
2.06
(0.06)
(0.05)
2.01
2.01
2.62
2.61
(0.03)
(0.03)
2.59
2.58
Refer to Note 3 Segment information for the calculation of adjusted earnings per share.
(1)
(1)
—
38
—
—
36
(1)
37
36
2023
784
(296)
488
(41)
447
(5)
442
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
136
Note 10: Intangible assets
Intangible assets
in € millions
Balance at December 31, 2021
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye*
Carrying value at January 1, 2022
Movements in 2022
Acquisitions through business combinations
Investments - including internally developed intangibles
Amortization
Impairments, including reversals thereof
Hyperinflation adjustment
Changes in exchange rates
Total movements
Balance at December 31, 2022
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at December 31, 2022
Movements in 2023
Acquisitions through business combinations
Investments - including internally developed intangibles
Amortization
Impairments, including reversals thereof
Hyperinflation adjustment
Changes in exchange rates
Total movements
Balance at December 31, 2023
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at December 31, 2023
Goodwill
Brands
Customer lists
Other intangibles
Total
1,182
—
(27)
1,155
—
1,155
262
—
—
—
6
(46)
222
1,405
—
(28)
1,377
34
—
—
—
10
9
53
1,458
—
(28)
1,430
2,239
—
(209)
2,030
—
2,030
72
—
(15)
—
9
(31)
35
2,288
—
(223)
2,065
16
—
(17)
—
17
(64)
(48)
2,255
—
(238)
2,017
972
—
(616)
356
—
356
193
—
(40)
—
—
(36)
117
1,127
—
(654)
473
26
—
(31)
—
—
23
18
1,151
—
(660)
491
171
241
(263)
149
1
150
11
30
(32)
(2)
—
—
7
179
268
(290)
157
(4)
21
(32)
(1)
—
2
(14)
180
273
(310)
143
4,564
241
(1,115)
3,690
1
3,691
538
30
(87)
(2)
15
(113)
381
4,999
268
(1,195)
4,072
72
21
(80)
(1)
27
(30)
9
5,044
273
(1,236)
4,081
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 "Financial Reporting in Hyperinflationary Economies" has been applied for our activities in Türkiye as from January 1, 2022. Refer to Note 7 Financing income and expenses for details on the
financial impact from applying IAS 29.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
137
Brands
Brands as included in the table below comprise of brands with indefinite useful lives and
brands with finite useful lives. Brands with indefinite useful lives are almost fully related to
Dulux, which is the major brand, due to its global presence, high recognition and strategic
nature. Other intangibles include licenses, know-how, intellectual property rights, software
and development cost. Both at year-end 2023 and 2022, there were no material purchase
commitments for individual intangible assets. No intangible assets were registered as
security for bank loans.
Acquisitions through business combinations
The additions from acquisitions in 2023 primarily relate to the acquisition of the Huarun
business, China. In 2022, additions from acquisitions primarily related to the acquisition of
Grupo Orbis S.A., Colombia, and of the wheel liquid coatings business of Lankwitzer
Lackfabrick GmbH, Germany. Refer to Note 2 Scope of consolidation for disclosures on
acquisitions.
The paints business of Grupo Orbis has been allocated to business unit Decorative Paints
Latin America in 2022. In 2022, the Grupo Orbis coatings businesses were reported in
Performance Coatings Other. In 2023, these businesses have been included in the
respective Performance Coatings business units.
Annual impairment testing
Goodwill and other intangibles with indefinite useful lives are tested for impairment per
business unit (one level below segment level) annually or whenever an impairment trigger
exists, applying the value-in-use method.
The impairment test is based on the five-year plan, which contains euro-denominated cash
flow projections for each of the business units. After the five-year plan period the terminal
growth rate is applied, unless a different approach would be more appropriate. Elements
considered to determine if a different approach would be more appropriate include high
growth/emerging economies, geographic expansion opportunities, introduction of new
product ranges and opportunities from market consolidation. In 2023, this exception was
applied for Decorative Paints China and North Asia and for Decorative Paints South East
and South Asia, for which the revenue growth and margin development projections were
extrapolated beyond the five-year explicit forecast period for another five years, applying
reduced average growth rates.
Macro-economic developments and other relevant variables (e.g. inflation, geopolitical
uncertainties, climate risks - refer to Note 1 Summary of material accounting policies for a
description of the impact from climate change on the financial statements) are closely
monitored to ensure that the impact on the estimated future cash flows is reflected in the
models which are used to assess the value of AkzoNobel's asset base. The impact of
climate change did not have a significant effect on the estimated future cash flows.
Goodwill and other intangibles per business unit
in € millions
Decorative Paints Europe, Middle East and Africa
Decorative Paints Latin America
Decorative Paints China and North Asia
Decorative Paints South East and South Asia
Powder Coatings
Marine and Protective Coatings
Automotive and Specialty Coatings
Industrial Coatings
Performance Coatings Other
Corporate and other
Total
AkzoNobel Report 2023
Goodwill
2023
Brands with indefinite
useful lives
2022
2023
106
179
32
7
155
210
301
440
—
—
837
102
680
221
—
—
—
—
—
—
836
90
643
208
—
—
—
—
—
—
2022
107
138
—
8
152
197
290
413
72
—
1,377
1,430
1,840
1,777
Other intangibles with
finite useful lives
2022
136
142
9
12
19
94
156
110
59
118
855
2023
126
193
35
10
34
96
150
125
—
105
874
Total intangibles
2022
1,080
2023
1,068
382
689
241
171
291
446
523
131
118
462
710
225
189
306
451
565
—
105
4,072
4,081
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
138
The key assumptions used in the projections for annual impairment testing are:
• Revenue growth per year: based on actual experience, analysis of markets and GDP
growth, and expected market share developments
• Margin development per year: based on actual experience and management’s long-
term projections
• Weighted average cost of capital per year: the pre-tax discount rate determined per
business unit, reflecting current market assessments of the time value of money and
the risks specifically associated with the business unit
Given the continued uncertainty in the macro-economic environment, additional sensitivity
tests have been performed, like last year, in order to assess the impact of more severe
adverse changes in key assumptions.
Both the regular sensitivity tests and the additional sensitivity tests show that the changes
in key assumptions would not cause carrying amounts to exceed recoverable amounts for
any of the business units, except for Decorative Paints China and North Asia, where the
recently acquired Huarun business is included.
Impairment of specific intangible assets
Periodical evaluations are performed in order to ensure timely detection of triggers that
might indicate impairment of specific assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate. In 2023 and 2022, no significant
impairment charges were recorded in relation to specific assets.
Key assumptions 2023
in % per year
Decorative Paints
Performance Coatings
Key assumptions 2022
in % per year
Decorative Paints
Performance Coatings
Average revenue
growth 2024-2028
Pre-tax weighted
average cost of
capital 2024-2028
2.4%-5.8%
2.0%-3.6%
10.8%-15.3%
10.7%-11.2%
Average revenue
growth 2023-2027
Pre-tax weighted
average cost of
capital 2023-2027
1.8-6.7%
1.3-4.0%
11.1-15.9%
10.8-12.4%
For all business units, a terminal value was calculated based on long-term inflation
expectations of 2% (2022: 2%). The estimated pre-tax cash flows have been discounted to
their present value using a pre-tax weighted average cost of capital. Discount rates have
been determined for each business unit and range from 10.7% to 15.3% (2022: 10.8% to
15.9%), with a weighted average of 11.5% (2022: 11.7%). Both the long-term inflation
expectations and the discount rates are reflective of the inflation expectation in the
eurozone.
In 2023 and 2022, no impairment charges were recognized in relation to the annual
impairment test.
In addition to the annual impairment test, sensitivity tests were performed to assess the
impact of changes in the key assumptions revenue growth (50% lower), margin
development (1 percentage point lower) and weighted average cost of capital
(1 percentage point higher).
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 11: Property, plant and equipment
139
Property, plant and equipment
in € millions
Balance at December 31, 2021
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye*
Carrying value at January 1, 2022
Movements in 2022
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Hyperinflation adjustment
Changes in exchange rates
Total movements
Balance at December 31, 2022
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2022
Movements in 2023
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Impairments, including reversals thereof
Hyperinflation adjustment
Changes in exchange rates
Total movements
Balance at December 31, 2023
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2023
Land and buildings
Plant equipment
and machinery
Other equipment
Construction in
progress and
prepayments on
projects
Assets not used
Total
1,546
(794)
752
10
762
75
(9)
2
53
(46)
27
(32)
70
1,658
(826)
832
5
(14)
2
70
(44)
(1)
29
(40)
7
1,656
(817)
839
2,124
(1,509)
615
3
618
45
(4)
11
87
(105)
2
(31)
5
2,208
(1,585)
623
1
(3)
8
145
(101)
(2)
13
(21)
40
2,310
(1,647)
663
919
(786)
133
—
133
5
(2)
6
36
(32)
—
(7)
6
923
(784)
139
—
(3)
2
40
(32)
—
1
(9)
(1)
904
(766)
138
300
(3)
297
2
299
—
(5)
242
(176)
—
1
9
71
373
(3)
370
—
(1)
253
(255)
—
—
8
(23)
(18)
354
(2)
352
10
(7)
3
—
3
—
—
1
—
—
—
—
1
11
(7)
4
—
(1)
—
—
(1)
—
—
—
(2)
10
(8)
2
4,899
(3,099)
1,800
15
1,815
125
(20)
262
—
(183)
30
(61)
153
5,173
(3,205)
1,968
6
(22)
265
—
(178)
(3)
51
(93)
26
5,234
(3,240)
1,994
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 "Financial Reporting in Hyperinflationary Economies" has been applied for our activities in Türkiye as from January 1, 2022. Refer to Note 7 Financing income and expenses for details on the
financial impact from applying IAS 29.
AkzoNobel Report 2023
140
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Acquisitions
The additions from acquisitions in 2023 primarily relate to the acquisition of the Huarun
business, China. The additions from acquisitions in 2022 primarily relate to the acquisition
of Grupo Orbis S.A., Colombia, and of the wheel liquid coatings business of Lankwitzer
Lackfabrik GmbH, Germany. Refer to Note 2 Scope of consolidation for disclosures on
acquisitions.
Investments in property, plant and equipment
In both 2023 and 2022 we have large investment projects. These include setting up a new
R&D center and relocating the production site in Barcelona, Spain, upgrading a Powder
Coatings plant in Gwalior, India, and establishing a new Powder Coatings manufacturing
line at our Hanoi, Vietnam location, as well as relocating our Wood Coatings site to High
Point, US.
Impairment of specific property, plant and equipment assets
Periodical evaluations are performed in order to ensure timely detection of triggers that
might indicate impairment of specific assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate. In 2023 and 2022, no significant
impairments were recognized.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
141
Note 12: Leases
Right-of-use assets
in € millions
Balance at January 1, 2022
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at January 1, 2022
Movements in 2022
Acquisitions
Additions/modifications
Disposals
Depreciation
Impairments, including reversals thereof
Changes in exchange rates
Total movements
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2022
Movements in 2023
Acquisitions
Additions/modifications
Disposals
Depreciation
Changes in exchange rates
Total movements
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2023
Land
Buildings
Other
Total
61
(19)
42
2
—
—
(3)
—
1
—
64
(22)
42
15
2
(1)
(2)
(2)
12
77
(23)
54
372
(170)
202
5
58
(7)
(64)
(3)
(2)
(13)
393
(204)
189
—
61
(5)
(63)
2
(5)
399
(215)
184
109
(49)
60
3
30
(2)
(31)
—
—
—
117
(57)
60
—
46
(6)
(34)
(2)
4
123
(59)
64
542
(238)
304
10
88
(9)
(98)
(3)
(1)
(13)
574
(283)
291
15
109
(12)
(99)
(2)
11
599
(297)
302
AkzoNobel mainly leases land, office spaces, stores and cars. Some leases provide for
additional rent payments that are based on changes in local price indices.
liability would increase by less than 20%, if we would exercise the extension options which
are currently not included in the valuation of the lease liability. This excludes so-called
“evergreens” or perpetual leases.
Some property leases contain extension options exercisable by AkzoNobel up to one year
before the end of the non-cancellable contract period. We have estimated that the lease
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
142
Total net cash outflow from financing activities related to leases recognized on the balance
sheet was €107 million (2022: €104 million). Net cash outflow for leases not recognized on
the balance sheet was €21 million (2022: €19 million).
Refer to Note 26 Financial risk management for the maturities of lease liabilities.
The table below shows the total impact from leases on our profit and loss account.
Income/(expenses) recognized in profit and loss
Note 13: Investments in associates
The total value of investments in associates at December 31, 2023, amounted to €216
million (2022: €193 million) and consisted of our equity share of €214 million (2022: €191
million) and loans granted of €2 million (2022: €2 million).
Balance sheet information of our share in associates
in € millions
Sub lease income
Depreciation right-of-use assets
Impairments for right-of-use assets
Interest expense on lease liabilities
Short-term lease expenses
Expenses relating to low-value assets
Variable lease expenses
Total expenses
2022
2
(98)
(3)
(6)
(11)
(4)
(4)
(124)
2023
—
(99)
—
(7)
(14)
(5)
(2)
in € millions, at December 31
Condensed balance sheet
Non-current assets
Current assets
Total assets
Shareholders’equity
Non-current liabilities
Current liabilities
(127)
Total liabilities and equity
Impairments of specific right-of-use assets
Periodical evaluations are performed in order to ensure timely detection of triggers that
might indicate impairment of specific assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate.
In 2023 and 2022, no significant impairments were recognized.
Profit and loss of our share in associates
in € millions
Condensed statement of income
Revenue
Profit before tax
Profit for the period
2022
97
152
249
191
6
52
249
2022
218
25
18
Associates
2023
108
163
271
214
8
49
271
Associates
2023
209
38
27
In 2023, the results from associates amounted to a profit of €27 million (2022: €18 million).
No significant contingent liabilities exist related to associates. The largest associate of
AkzoNobel is Metlac S.p.a., incorporated in Italy. None of the associates are considered
individually material to the group.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
143
Note 14: Financial non-current assets
Financial non-current assets can be broken down as per the table below.
Of the total carrying value of inventories at year-end 2023, €10 million was measured at net
realizable value (2022: €16 million). In 2023, €86 million was recognized in the statement of
income for the write-down of inventories (2022: €86 million), while €20 million of write-
downs were reversed (2022: €30 million). There are no inventories subject to retention of
title clauses.
Financial non-current assets
in € millions, at December 31
Pension assets
Loans and receivables
Other financial non-current assets
Total
2022
1,029
362
84
1,475
2023
1,017
299
93
1,409
Note 16: Trade and other receivables
Trade and other receivables can be broken down as per the table below.
Pension assets (€1,017 million) relate to pension plans in an asset position (2022: €1,029
million). For more information on post-retirement benefit plans, refer to Note 18 Post-
retirement benefit provisions.
Loans and receivables include the subordinated loan granted to the Pension Fund APF in
the Netherlands valued at €90 million (2022: €89 million).
Loans and receivables are considered to have low credit risk; the impairment provision
recognized during the period was limited to 12 months expected losses.
Trade and other receivables
in € millions, at December 31
Trade receivables
Prepaid expenses
Tax receivables other than income tax
FX contracts
Receivables from associates
Other receivables
Total
2022
2,123
58
156
18
4
88
2023
2,187
39
154
14
—
89
2,447
2,483
Note 15: Inventories
The total carrying value of inventories as per December 31, 2023 has decreased compared
to December 31, 2022, mainly due to the combined impact of lower raw material prices,
currency translation and lower volumes. Inventories can be broken down as per the table
below.
Inventories
in € millions, at December 31
Raw materials and supplies
Work in progress
Finished products and goods for resale
Total
AkzoNobel Report 2023
2022
676
104
1,063
1,843
2023
579
91
979
1,649
Other receivables consist of a large number of individually immaterial items.
Ageing of trade receivables
in € millions, at December 31
Performing trade receivables
Past due trade receivables
< 3 months
> 3 months
Allowance for impairment
Total trade receivables
2022
1,987
104
74
(42)
2,123
2023
2,040
118
68
(39)
2,187
Trade receivables are presented net of an allowance for impairment of €39 million (2022:
€42 million). In 2023, €14 million of impairment losses were recognized in the statement of
income (2022: €17 million) and €8 million was reversed (2022: €8 million). Since the total
amount of impairment losses under IFRS 9 is not significant, no separate disclosure was
made in the statement of income.
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
144
Allowance for impairment of trade receivables
Outstanding common shares
2022
2023
Number of shares
in € millions
Balance at January 1
Additions charged to income
Release of unused amounts
Utilization
Acquisitions
Currency exchange differences
Balance at December 31
Note 17: Group equity
42
17
(8)
(9)
2
(2)
42
42
14
(8)
(8)
—
(1)
39
Composition of share capital at year-end 2022
in €
Priority shares (48 with nominal value of €400)
Cumulative preferred shares (200 million with nominal value of
€0.50)
Common shares (500 million with nominal value of €0.50)
Total
Authorized share
capital
Subscribed share
capital
19,200
100,000,000
19,200
—
250,000,000
350,019,200
87,187,614
87,206,814
Composition of share capital at year-end 2023
in €
Authorized share
capital
Subscribed share
capital
Priority shares (48 with nominal value of €400)
19,200
19,200
Cumulative preferred shares (200 million with nominal value of
€0.50)
Common shares (500 million with nominal value of €0.50)
Total
100,000,000
—
250,000,000
350,019,200
85,300,338
85,319,538
AkzoNobel Report 2023
Outstanding at January 1
Issued in connection to performance-related share plan,
restricted share plan and share-matching plan
2022
2023
181,609,509
174,375,227
214,262
172,344
Shares cancelled related to share buyback from previous year
(2,744,210)
(3,946,896)
Shares bought back during the year
Shares bought back during the year not yet cancelled
(8,651,230)
3,946,896
—
—
Outstanding at December 31
174,375,227
170,600,675
Weighted average number of common shares
Number of shares
2022
2023
Weighted average number of common shares
174,735,139
170,573,555
Subscribed share capital
For further details on subscribed share capital, refer to Note F Shareholder's equity in the
Company financial statements.
Cash flow hedge reserve
The cash flow hedge reserve comprises the effective portion of the cumulative net change
in the fair value of hedging instruments used in cash flow hedges, pending subsequent
recognition in the statement of income or in the initial cost or other carrying amount of a
non-financial asset or non-financial liability.
Cumulative translation reserve
Cumulative translation reserves comprise all foreign exchange differences arising from the
translation of the financial statements of foreign operations, as well as from the translation
of intercompany loans with a permanent nature and liabilities and derivatives that hedge the
net investments in a foreign subsidiary.
Equity-settled transactions
Equity-settled transactions relate to the performance-related and restricted share plans and
the share-matching plan, whereby shares are granted to the Board of Management,
Executive Committee, other executives and certain non-executive employee categories. For
details on share-based compensation, refer to Note 6 Employee benefits.
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
145
Dividend
Our dividend policy is to pay a stable to rising dividend. In 2023, an interim dividend of
€0.44 (2022: €0.44) per common share was paid. We propose a 2023 final dividend of
€1.54 (2022: €1.54) per common share, which would equal a total 2023 dividend of €1.98
(2022: €1.98).
All 3.9 million shares which were repurchased in 2022 and still outstanding at December
31, 2022, were cancelled in 2023.
For further details on weighted average number of shares, refer to Note 9 Earnings per
share.
Share buybacks
In February 2022, a €500 million share buyback program was announced which was
completed in 2022. As at December 31, 2022, a total of 7.3 million shares had been
acquired under this program, of which 3.4 million shares were cancelled.
Non-controlling interests
None of the non-controlling interests are considered individually material to the group. The
effects of share transactions with non-controlling interest shareholders are recorded in
equity insofar these do not lead to changes in control.
Non-controlling interests
Group entity
Akzo Nobel India Limited, Kolkata, India
Partner at year-end 2023
Privately held, India
PT ICI Paints Indonesia, Jakarta, Indonesia
PT DWI Satrya Utama, Indonesia
Akzo Nobel Kemipol A.S., Izmir, Türkiye
Altan, Eyyüp and other family members
International Paints of Shanghai Co. Ltd, Shanghai, China
Shanghai Huayi Fine Chemical Co. Ltd and China National
Shipbuilding Equipment & Materials Corp.
Akzo Nobel Paints (Malaysia) Sdn. Bhd.,Kuala Lumpur, Malaysia
Permodalan Nasional Berhad, Malaysia
Akzo Nobel Saudi Arabia Ltd, Saudi Arabia
Yousuf Bin Ahmed Kanoo Co. Ltd, Saudi Arabia
Akzo Nobel Oman SAOC, Muscat, Oman
Omar Zawawi Establishment LLC, Oman
Akzo Nobel UAE Paints L.L.C., United Arab Emirates
Kanoo Group, United Arab Emirates
Societe Tunisienne de Peintures Astral S.A., Megrine, Tunisia
Several people
International Paint (Korea) Ltd, Busan, South-Korea
Noroo Holdings, South Korea
Akzo Nobel Coatings SA, Casablanca, Morocco
Société Industrielle de Peinture and several people
Others
Total
%
25.24
45.00
49.00
49.00
40.05
40.00
50.00
40.00
40.00
40.00
40.00
2022
Equity stake
in € millions
54
31
24
16
20
14
12
8
8
6
4
18
215
%
25.24
45.00
49.00
49.00
40.05
40.00
50.00
40.00
40.00
40.00
40.00
2023
Equity stake
in € millions
55
32
24
21
17
16
12
11
10
6
5
15
224
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
146
Note 18: Post-retirement benefit provisions
We aim to strike a cautious balance between these factors in order to agree affordable
contribution schedules with plan fiduciaries.
Post-retirement benefit provisions relate to defined benefit pension and other post-
retirement benefit plans, including healthcare or welfare plans. The largest defined benefit
pension plans are the ICI Pension Fund (ICIPF) and the Akzo Nobel (CPS) Pension Scheme
(CPS) in the UK which together account for 86% of defined benefit obligations (DBO) and
90% of plan assets. Other pension plans include among others the largely unfunded plans
in Germany, the plans in the US and certain other smaller plans in the UK. The benefits of
these pension plans are based primarily on years of service and employees’ compensation.
The funding policy for the plans is consistent with local requirements in the countries of
establishment. We also provide certain healthcare and life insurance benefits to retired
employees, mainly in the US and the Netherlands.
Valuations of the obligations under the plans are carried out regularly by independent
qualified actuaries. We accrue for the expected costs of providing such post-retirement
benefits during the service years of the employees. Governance of the benefit plans is the
responsibility of the Executive Pensions Committee. This committee provides oversight of
the costs and risks of the plans including oversight of the impact of the plans on the
company in terms of cash flow, pension expenses and the balance sheet. The committee
develops and maintains policies on benefit design, funding, asset allocation and
assumption setting.
Pension plans
Almost all of the defined benefit plans have been closed to new members since the early to
mid-2000s, although in many plans long-serving employees continue to accrue benefits.
For plans in the US, benefit accrual is frozen and employees participate in defined
contribution plans for future service. In countries where plans are closed, new employees
are eligible to join a defined contribution arrangement. In countries in high growth markets,
pension schemes currently are not material. Unless mandated by law, it is our policy that
any new plans are established as defined contribution plans.
The most significant risks that we run in relation to defined benefit plans are investment
returns falling short of expectations, low discount rates, inflation exceeding expectations,
retirees living longer than expected and legislation changes. The assets and liabilities of
each of the funded plans are held outside of the company in a trust or a foundation, which
is governed by a board of fiduciaries or trustees, depending on the legal arrangements in
the country concerned. The primary objective with regards to the investment of pension
plan assets is to ensure that each individual plan has sufficient funds available to satisfy
future benefit obligations in accordance with local legal and legislative requirements. For this
purpose, we work closely with plan trustees or fiduciaries to develop investment strategies.
Studies are carried out periodically to analyze and understand the trade-off between
expected investment returns, volatility of outcomes and the impact on cash contributions.
AkzoNobel Report 2023
Plan assets principally consist of insurance (annuity) policies, long-term interest-earning
investments and (investment funds with holdings primarily in) quoted equity securities. Our
largest plans use derivatives (such as index futures, currency forward contracts and swaps)
to reduce volatility of underlying variables, for efficient portfolio management and to improve
the liability matching characteristics of the assets. Limits have been set on the use of
derivatives which are periodically subject to review for compliance with the pension fund’s
investment strategy.
In line with our proactive pension risk management strategy, we seek to reduce risk in our
pension plans over time. We evaluate potential de-risking opportunities on an ongoing
basis. Future de-risking transactions may have both cash flow and balance sheet impacts
which may be substantial, as had some of the de-risking actions already taken. The cost of
fully removing risk would exceed estimated funding deficits.
Between 2014 and 2023, ICIPF and a smaller UK plan, the ICI Specialty Chemicals Pension
Fund (ISCPF), have invested in annuity buy-in contracts that aim to hedge all key risks
related to their pensioner populations. CPS also invested in an annuity buy-in contract in
November 2022 that aims to hedge all key risks related to 39% of their pensioner liabilities.
In April 2023, the Trustee of the ISCPF entered into a further annuity buy-in agreement with
Pension Insurance Corporation plc. It covers, in aggregate, £148 million (€168 million) of
pensioner liabilities (insurer valuation). The buy-in involved the purchase of a bulk annuity
policy under which the insurer will pay to ISCPF amounts equivalent to the benefits payable
to all remaining pensioner and deferred members. The pension liabilities remain with, and
the matching annuity policies are held within, ISCPF. The accounting impact of the
transaction is a lower valuation of the plan assets giving a reduction in other comprehensive
income of £45 million (€51 million).
By purchasing bulk annuities, the ICIPF, CPS and ISCPF Trustees have taken significant
steps in actively de-risking liabilities and reducing the risk that AkzoNobel will be required to
contribute additional cash in the future.
CPS also has an insurance contract to hedge longevity risk in respect of a portion of its
pensioners not impacted by the recent buy-in transaction.
On November 25, 2020, correspondence between the Chancellor of the Exchequer and
the UK Statistics Authority (UKSA) was published regarding the future of the Retail Price
Index (RPI) measurement of inflation. With effect from February 2030 onwards, increases in
the RPI will be aligned with those under the Consumer Prices Index (CPI) with owner
occupiers’ housing costs (CPIH). Broadly this is expected to result in RPI inflation being 1%
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
147
lower in the longer term than under the existing methodology. The inflation assumption
continues to be calculated using a market breakeven inflation rate and the CPI inflation
assumption, on which the benefits of some plans are based, is set with reference to RPI.
Until 2030, the CPI inflation assumption is calculated as 1% below RPI and from 2030
onwards as 0.1% below RPI.
The Virgin Media Ltd versus NTL Pension Trustees decision, handed down by the UK High
Court on June 16, 2023, has implications for the validity of trust deeds of amendment over
the last 25 years. This decision is being appealed. Whether this decision could also have
implications for AkzoNobel’s defined benefit pension plans in the UK, is yet to be
determined. We are not in a position to make a reliable estimate of the impact of this
decision, if any, or of the impact of any related legal or governmental follow-up actions.
Therefore, no changes were made to the defined benefit obligation at this stage.
The remaining pension plans primarily represent plans accounted for as defined
contribution plans. This includes, among others, the Pension Fund APF in the Netherlands
and the 401k Plan in the US.
The ITP2 plan in Sweden is financed through insurance with the Alecta insurance company
and is classified as a multi-employer defined benefit plan. As AkzoNobel does not have
access to sufficient information from Alecta to enable defined benefit accounting treatment,
it is accounted for as a defined contribution plan. Contributions in 2023 were €1 million
(2022: €2 million). Alecta’s funding ratio is normally allowed to vary between 125% and
175%. The most recently quoted ratio at September 2023 stood at 178%.
The expenses of all plans accounted for as defined contribution plans in AkzoNobel totaled
€90 million in 2023 (2022: €89 million).
DBO at funded and unfunded pension plans*
in € millions, at December 31
Wholly or partly funded plans
Unfunded plans
Total
* Excludes other post-retirement benefit plans.
2022
9,229
246
9,475
2023
9,137
270
9,407
Other post-retirement benefit plans
AkzoNobel provides certain healthcare and life insurance benefits to retired employees,
mainly in the US and the Netherlands. The risks to which the US healthcare plans expose
AkzoNobel include the risk of future increases in the cost of healthcare which would
increase the cost of maintaining the plans. The benefit payments to retirees under the
Dutch plan are frozen. Both plans expose AkzoNobel to the risk of a decline in discount
rates, which increases the plan obligations, and longevity risk as the plans generally pay
lifetime benefits.
Reconciliation to the balance sheet
The closing net balance sheet position of €549 million net asset (2022: €602 million net
asset) includes the pension plans (€652 million net asset; 2022: €709 million net asset) and
other post-retirement plans (€103 million liability; 2022: €107 million liability).
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
148
Reconciliation to the balance sheet
in € millions
Balance at the beginning of the period
Statement of income
Current service cost
Past service cost
Settlements
Net interest (charge)/income on net defined benefit (liability)/asset
Cost recognized in statement of income
Remeasurements recognized in Other comprehensive income
Actuarial (loss)/gain due to liability experience
Actuarial (loss)/gain due to liability financial assumption changes
Actuarial (loss)/gain due to liability demographic assumption changes
Actuarial (loss)/gain due to buy-ins
Return on plan assets (less than)/greater than discount rate
Remeasurement effects recognized in Other comprehensive income
Cash flow
Employer contributions
Employee contributions
Benefits and administration costs paid from plan assets
Net cash flow
Other
Acquisitions/divestments/transfers
Changes in exchange rates
Total other
Balance at the end of the period
Asset restriction
Net balance sheet position
Presentation of Net balance sheet position
Financial non-current assets
Post-retirement benefit provisions
Current portion of provisions
Net balance sheet position
AkzoNobel Report 2023
DBO
(14,310)
(31)
—
18
(254)
(267)
(279)
3,754
18
—
—
3,493
—
(2)
842
840
—
662
662
Plan
assets
15,330
—
—
(18)
272
254
—
—
—
(76)
(3,784)
(3,860)
70
2
(842)
(770)
(1)
(760)
(761)
(9,582)
10,193
DBO
(9,582)
Plan
assets
10,193
(22)
(1)
13
(455)
(465)
(131)
(233)
256
—
—
(108)
—
(2)
793
791
1
(147)
(146)
—
—
(13)
488
475
—
—
—
(51)
10
(41)
63
2
(793)
(728)
(1)
168
167
(9,510)
10,066
2022
Total
1,020
(31)
—
—
18
(13)
(279)
3,754
18
(76)
(3,784)
(367)
70
—
—
70
(1)
(98)
(99)
611
(9)
602
1,029
(387)
(40)
602
2023
Total
611
(22)
(1)
—
33
10
(131)
(233)
256
(51)
10
(149)
63
—
—
63
—
21
21
556
(7)
549
1,017
(423)
(45)
549
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
149
Administrative expenses
In addition to the expenses borne by the funds themselves, some expenses are borne
directly by AkzoNobel. Administrative expenses, especially for the UK pension funds, of €25
million are included in 2023 operating income (2022: €26 million). In addition, we directly
incurred asset management expenses of €2 million (2022: €2 million), which have been
included in other comprehensive income.
Interest costs
Interest costs on the DBO for both pensions and other post-retirement benefits, together
with the interest income on plan assets, comprise the financing income related to post-
retirement benefits of €33 million (2022: €18 million), refer to Note 7 Financing income and
expenses.
Pension plans in asset position
Pension balances recorded under Financial non-current assets totaled €1,017 million
(2022: €1,029 million). The €12 million decrease in 2023 is due to €87 million of net
actuarial losses, partly offset by €15 million of of employer contributions, net income of €42
million and exchange rate translation gains of €18 million.
Plan assets could be recognized in the Company's balance sheet under IFRIC 14 because
economic benefits are available in the form of future refunds from the plan or reductions in
future contributions to the plan, either during the life of the plan or on the (final) settlement
of the plan liabilities.
Plan assets
The equities and government bond debt assets have quoted prices in active markets,
although most are held through funds comprised of such instruments which are not actively
traded themselves. The UK buy-in annuity policies have a value that is equal to the DBO of
the pensioners covered by the policies.
The total value of plan assets not quoted in active markets is €6,603 million (2022: €6,666
million), including the UK buy-in annuity policies totaling €6,123 million (2022: €6,078
million), investments in real estate totaling €258 million (2022: €343 million) and other
investments in infrastructure and insurance policies.
Plan assets did not directly include any of AkzoNobel’s own transferable financial
instruments, nor any property occupied by or assets used by the company.
Plan assets
in € millions, at December 31
Equities
Debt - fixed interest government
bonds
Debt - index-linked government bonds
Debt - corporate and other bonds
UK buy-in annuity policies
Cash and cash equivalents
Other
Total
2022
Percentage of
total
2
6
12
13
60
2
5
Total
225
580
1,230
1,394
6,078
166
520
2023
Percentage of
total
2
6
12
15
61
1
3
Total
192
562
1,177
1,503
6,123
126
383
10,193
100
10,066
100
Cash flows
In 2024, we expect to contribute €43 million (2023: €53 million) to our defined benefit
pension plans. We expect to pay a further €10 million (2023: €10 million) to our other post-
retirement benefit plans. No allowance is made for any special one-off contributions that
may arise in relation to new de-risking opportunities.
Cash flows
in € millions
Regular contributions
Top-ups
Total
2023
45
8
53
Pensions
2024
36
7
43
Other post-
retirement
benefits
2023
2024
10
—
10
10
—
10
Sensitivity of DBO
The actuarially calculated sensitivity effects on DBO shown in the table allow for an
alternative value for each assumption while the other actuarial assumptions remain
unchanged. This table illustrates the overall impact on DBO for the changes shown, which
management assessed could be reasonably possible over a longer term from a sensitivity
test perspective. It should be noted, however, that this analysis does not indicate and
probability of such changes occurring, not does it preclude larger changes in any given
period or longer term.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
150
In addition, the significance of the impact and the range of reasonably possible alternative
assumptions may differ between the different plans that comprise the total DBO. In
particular, the plans differ in benefit design, currency and average term, meaning that
different assumptions have different levels of significance for each plan.
The sensitivities in the table only apply to the DBO and not to the net amounts recognized
in the balance sheet. Movements in the fair value of plan assets (which include the de-
risking instruments) would, to a significant extent, be expected to offset movements in the
DBO resulting from changes in the given assumptions.
The sensitivity analysis is intended to illustrate the inherent uncertainty in the valuation of the
DBO under market conditions at the measurement date. Its results, in principle, cannot be
extrapolated due to increasing non-linear effects that changes in the key actuarial
assumptions, when deviating further from the assumptions presented, may have on the
total DBO. Any management actions that may be taken to mitigate the inherent risks in the
post-retirement defined benefit plans are not reflected in this analysis, as they would
normally be reflected in plan asset changes rather than DBO changes.
At ICIPF, the annuity buy-in contracts cover 99% of pensioner liabilities (2022: 99%) and
88% of total liabilities (2022: 88%).
At CPS, the annuity buy-in contract covers 39% of pensioner liabilities (2022: 42%) and
28% of total liabilities (2022: 28%). Also at CPS, the longevity hedge contract covers 45%
of pensioner liabilities (2022: 48%) and 33% of total liabilities (2022: 30%).
ICIPF
UK
260
152
362
CPS
UK
140
85
94
Other
pension plans
Other post-
retirement
benefits
74
39
42
4
—
4
Total
478
276
502
8.9
11.8
11.3
8.7
10.0
Sensitivity of DBO to change in assumptions
in € millions
Discount rate: 0.5% decrease
Price inflation: 0.5% increase*
Life expectancy: one year increase from age 60
Maturity information
Weighted average duration of DBO (years)
* The sensitivity to price inflation assumption includes corresponding changes to all inflation-related compensation increases,
pensions in payment and pensions in deferment.
Future benefit payments
The figures in the table below are the estimated future benefit payments to be paid from the
plans to beneficiaries over the next ten years.
Future benefit payments
in € millions
2024
2025
2026
2027
2028
2029-2033
AkzoNobel Report 2023
Pensions
786
792
797
806
809
4,157
Other post-
retirement
benefits
10
10
10
9
9
39
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
151
Key figures and assumptions by plan
in € millions or %
Percentage of total DBO
Defined Benefit Obligation at year-end
Fair value of plan assets at year-end
Plan funded status
Restriction on asset recognition
Amounts recognized on the balance sheet
Percentage of total current service cost
Current service cost
Employer contributions
Discount rate
Rate of compensation increase
Inflation
Pension increases
Life expectancy (in years)
Currently aged 60
Males
Females
Currently aged 45, from age 60
Males
Females
ICIPF
UK
61%
(5,875)
6,293
418
—
418
6%
(2)
—
4.9%
1.5%
3.3%
3.1%
26.2
27.8
27.3
29.0
CPS
UK
25%
Other
pension
plans
13%
Other post-
retirement
benefits
1%
(2,362)
2,895
533
—
533
(1,238)
1,005
(233)
(9)
(242)
26%
(8)
13
4.9%
1.4%
3.3%
2.7%
26.2
29.1
27.3
30.2
68%
(21)
45
4.6%
2.0%
2.3%
2.2%
25.7
28.1
27.0
29.4
(107)
—
(107)
—
(107)
—
—
12
5.9%
—
—
—
25.8
27.8
26.8
28.8
2022
Total
100 %
(9,582)
10,193
611
(9)
602
100%
(31)
70
4.9%
1.5%
3.2%
2.9%
26.1
28.2
27.3
29.3
ICIPF
UK
61%
(5,762)
6,176
414
—
414
5%
(1)
1
4.6%
1.4%
3.1%
2.9%
25.7
27.3
26.8
28.5
CPS
UK
25%
Other
pension
plans
13%
Other post-
retirement
benefits
1%
(2,373)
2,931
558
—
558
(1,272)
959
(313)
(7)
(320)
23%
(5)
7
4.6%
1.4%
3.1%
2.6%
25.5
28.5
26.6
29.6
72%
(16)
45
4.3%
2.2%
2.4%
2.2%
26.0
28.6
27.4
29.8
(103)
—
(103)
—
(103)
—
—
10
6.1%
—
—
—
25.7
27.8
26.6
28.7
2023
Total
100%
(9,510)
10,066
556
(7)
549
100%
(22)
63
4.6%
1.5%
3.0%
2.8%
25.7
27.8
26.8
28.9
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
152
Key plan details for the two largest pension plans1
Type of plan
Benefits
ICI Pension Fund, UK
Akzo Nobel (CPS) Pension Scheme, UK
Defined benefit, based upon years of service and final salary
Defined benefit, based upon years of service and final salary
Retirement pension for employee
Dependents’ pensions on death of employee/pensioner
Options for ill health early retirement
Retirement pension for employee
Dependents’ pensions on death of employee/pensioner
Options for ill health early retirement
Pension increases (main benefit section)
Annually linked to UK RPI with a maximum of 5%
Annually linked to UK CPI with a maximum of 5%
Plan structure
Governance
Regulatory framework
Funding basis
Frequency of funding reviews
Latest completed valuation
Plans are set up under a trust and are tax approved
Plans are set up under a trust and are tax approved
Trustee directors:
Three member-nominated
Four appointed with the agreement of Law Debenture
One independent (Law Debenture)
Trustee directors:
Three member-nominated
Two company-nominated
One independent (Law Debenture)
The plans are tax approved and assets are held in trust for the benefit of participants. The trustees have a legal duty to manage the trust in the best
interests of participants. Investment strategy is controlled by the trustees in consultation with the company
A plan specific basis must be agreed with each trustee board in accordance with UK regulations. The basis is not the same as the IFRS calculation as it
uses more prudent assumptions about life expectancy and the discount rates reflect prudent estimates of the expected return on assets actually held,
thus the trustees’ investment strategies will impact the discounted value of liabilities
Funding surplus/deficit at latest completed valuation1,2
£49 million (€56 million) surplus
Normally every three years
March 31, 2023
Normally every three years
March 31, 2023
£190 million (€219 million) surplus
Recovery plan
Next funding review
Asset allocation at March 31, 2023
Matching:
Return seeking:
Membership at March 31, 2023
Active members
Deferred members
Pensioners, spouses and dependants
Total
As there were sufficient assets to cover the Fund's technical provisions, a
recovery plan is not required
As there were sufficient assets to cover the Fund's technical provisions, a
recovery plan is not required
March 31, 2026 (due to be completed before June 30, 2027)
March 31, 2026 (due to be completed before June 30, 2027)
100%
0%
Buy-in annuity contracts cover 99% of pensioner liabilities and 88% of total
liabilities
86%
14%
Buy-in annuity contract covers 39% of pensioner liabilities and 28% of total
liabilities. The longevity hedge contract covers 45% of pensioner liabilities
and 33% of total liabilities
65
4,877
33,440
38,382
238
5,056
16,110
21,404
1 Amounts in euro are a convenience translation using the December 31, 2023, exchange rate.
2 Based on local valuation regulations.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
153
Note 19: Other provisions and contingent liabilities
General
Provisions are recognized for legal and constructive obligations, when an outflow of
economic benefits for settlement is probable and the amount can be reliably estimated. It
should be understood that, in light of possible future developments, such as: (a) potential
additional lawsuits; (b) possible future settlements; and (c) rulings or judgments in pending
lawsuits, certain cases may result in additional liabilities and related costs. At this point in
time, we cannot estimate any additional amount of loss or range of loss in excess of the
recorded amounts with sufficient certainty to allow such amount or range of amounts to be
meaningful. While the outcome of said cases, claims and disputes cannot be predicted with
certainty, we believe, based upon legal advice and information received, that the final
outcome will not materially affect our consolidated financial position but could be material to
our results of operations or cash flows in any one accounting period.
Movements in other provisions
in € millions
Balance at January 1, 2023
Additions made during the year
Utilization
Amounts reversed during the year
Unwind of discount
Acquisitions
Changes in exchange rates
Balance at December 31, 2023
Non-current portion of provisions
Current portion of provisions
Balance at December 31, 2023
Restructuring
of activities
Environmental
costs
Liabilities
to (former)
employees
Sundry
Total
42
55
(55)
(6)
—
—
—
36
1
35
36
51
11
(18)
—
(2)
1
(1)
42
30
12
42
107
28
(21)
—
3
—
—
117
88
29
117
93
48
(48)
(9)
—
1
—
85
42
43
85
293
142
(142)
(15)
1
2
(1)
280
161
119
280
AkzoNobel Report 2023
Provisions for restructuring of activities
Provisions for restructuring of activities comprise of accruals for certain employee benefits
and for costs which are directly associated with plans to exit or cease specific activities and
closing down of facilities. For all restructuring provisions, a detailed formal plan exists and
the implementation of the plan has started or the plan has been announced before the
balance sheet date. Most restructuring plans are expected to be completed within one year
from the balance sheet date.
Environmental liabilities
We are confronted with costs arising out of environmental laws and regulations, which
include obligations to eliminate or limit the effects on the environment of the disposal or
release of certain wastes or substances at various sites. Proceedings involving
environmental matters, such as the alleged discharge of chemicals or waste materials into
the air, water, or soil, are pending against us in various countries. In some cases, this
concerns sites divested in prior years or derelict sites belonging to companies acquired in
the past. The majority of the cash outflows relating to the environmental liabilities is
expected to be within one to five years, whilst some one-third is projected to be spent after
ten years. The provision has been discounted using an average pre-tax discount rate of
3.7% (2022: 3.8%).
Estimating the impact of environmental liabilities often is complex and requires significant
judgement. It requires the assessment of many (often interconnected) elements, which
contain varying levels of uncertainty. Environmental liabilities can change substantially,
among others due to the emergence of additional information on the nature or extent of the
contamination, the geological circumstances, changes in (the interpretation and
enforcement of) environmental regulations, new and evolving analytical and remediation
techniques, success or lack of success of currently anticipated clean-up methods, actions
by governmental agencies or private parties, success in allocating liability to other
potentially responsible parties, the financial viability of other potentially responsible parties
and third-party indemnitors, and/or other factors.
Especially for some sites for which we are faced with relatively new legislation, which are in
the early stages of discussions with regulators, and/or where there is limited information
available from earlier experience, there may be considerable variability between the clean-
up activities that are currently being undertaken or planned and the ultimate actions that
could be required. For such sites, the costs for the earlier years might be rather reliably
estimable, whilst for later years it is much more difficult, if possible at all, to estimate the
cost of environmental compliance and remediation. If the level of uncertainty is such that no
reliable estimate can be made for the longer-term costs, no provision for such costs is
recorded. While it is not feasible to predict the outcome of all pending environmental
exposures, it is reasonably possible that there will be a need for future (changes to)
provisions for environmental costs which, in management’s opinion, based on information
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
154
Current portion of provisions
The current portion of post-retirement benefit provisions (€45 million) and the current
portion of other provisions (€119 million) add up to €164 million (2022: €166 million), as
reflected in the balance sheet.
Discount rates
The discount rates used in calculating the provisions recognized at December 31, 2023,
are mentioned in the paragraphs on provisions for environmental costs, liabilities to (former)
employees and sundry provisions. Changes in discount rates will affect our consolidated
financial position. A sensitivity test showed that a one percentage point increase or
decrease of discount rates will have an impact down or up, respectively, of €6 million on
the provisions recognized at December 31, 2023.
currently available, would not have a material effect on the company’s financial position but
could be material to the company’s results of operations in any one accounting period.
Liabilities to (former) employees
Liabilities to (former) employees consist of employer liability plans, jubilee plans and other
long-term compensation plans. The majority of the cash outflows related to liabilities to
(former) employees is expected to be after five years. In calculating the liabilities to (former)
employees, a pre-tax discount rate of on average 4.3% (2022: 5.0%) has been used.
Sundry provisions
Sundry provisions relate to a variety of provisions, including provisions for (customer)
claims, sales returns, guarantees and other operational provisions. The majority of the cash
outflows related to sundry provisions is expected to be within one to five years. In
calculating the sundry provisions, a pre-tax discount rate of on average 3.7% (2022: 5.3%)
has been used.
Contingent liabilities
A number of claims against AkzoNobel are pending, many of which are contested. This
includes those where Akzo Nobel N.V. and two of its subsidiaries are currently defending
claims brought by INPEX Operations Australia Pty Ltd and JKC Australia LNG Pty Ltd
relating to the Ichthys Onshore Project in Darwin, Western Australia. A trial has been listed
in the Federal Court of Australia, commencing June 17, 2024. The claims are contested
and AkzoNobel denies liability in respect of both of these claims.
We are also involved in legal disputes and disputes with tax authorities in several
jurisdictions. Those disputes include situations in which AkzoNobel has provided various
indemnities and guarantees in respect of past divestments to the relevant purchasers and
their permitted assigns (if applicable), which in general are capped in time and/or amount (in
proportion to the value received). The provided guarantees and indemnities have varying
maturity periods. AkzoNobel has received various claims under such indemnities and
guarantees. In some instances, AkzoNobel has been named as a direct defendant despite
the divestments.
Akzo Nobel N.V. has withdrawn its declarations of joint and several liability under Article 403
of Book 2 of the Dutch Civil Code for certain Dutch former Specialty Chemicals subsidiaries
divested as per October 1, 2018, and is following the procedures to terminate its residual
liability under those declarations under Article 404 of Book 2 of the Dutch Civil Code. One
objection against the termination of residual liability is still pending and AkzoNobel, Nouryon
and Nobian continue to cooperate to get this resolved.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
155
Note 20: Net debt
Net debt
in € millions
Net debt at January 1, 2022
Net cash from operating activities
Acquisitions
Investments in short-term investments
Repayments of short-term investments
Net cash from other investing activities
Unwind of discount and amortized cost
Proceeds from borrowings
Borrowings repaid
New/modification/disposal of lease contracts
Transfers from long-term to short-term
Movement bank overdrafts and short-term bank loans
Dividends
Share buyback
Net cash from discontinued operations
Changes in exchange rates
Net debt at December 31, 2022
Net debt at January 1, 2023
Net cash from operating activities
Acquisitions
Investments in short-term investments
Repayments of short-term investments
Net cash from other investing activities
Net gain/loss from changes in fair value
Unwind of discount and amortized cost
Proceeds from borrowings
Borrowings repaid
New/modification/disposal of lease contracts
Transfers from long-term to short-term
Movement bank overdrafts and short-term bank loans
Dividends
Net cash from discontinued operations
Changes in exchange rates
Net debt at December 31, 2023
AkzoNobel Report 2023
Long-term
borrowings
Short-term
borrowings
Short-term
investments
Cash and cash
equivalents
1,994
1,556
—
71
—
—
—
9
1,359
—
79
(139)
—
—
—
—
(41)
3,332
—
2
—
—
—
5
8,152
(7,322)
—
139
16
—
—
—
(5)
(58)
—
—
(1,361)
1,084
—
—
—
—
—
—
—
—
—
—
(1)
(1,152)
(263)
588
1,361
(1,084)
230
—
(9,511)
7,322
—
—
(16)
379
669
9
18
Net debt
2,340
(263)
661
—
—
230
14
—
—
79
—
—
379
669
9
(29)
2,543
(336)
(1,450)
4,089
3,332
2,543
—
—
—
—
—
—
10
499
—
96
(793)
—
—
—
21
—
—
—
—
—
—
2
5,337
(6,295)
—
793
18
—
—
—
(336)
—
—
(64)
142
—
(7)
—
—
—
—
—
—
—
—
—
(1,450)
(1,126)
114
64
(142)
108
—
—
(5,836)
6,295
—
—
(18)
368
6
104
3,165
2,398
(265)
(1,513)
4,089
(1,126)
114
—
—
108
(7)
12
—
—
96
—
—
368
6
125
3,785
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
156
Analysis of net debt by category
in € millions, at December 31
Bonds issued
Lease liabilities
Other long-term borrowings
Long-term borrowings
Current portion of long-term borrowings
Current portion of lease liabilities
Debt to credit institutions
Other short-term borrowings
Short-term borrowings
Total borrowings
Short-term investments
Cash and cash equivalents
Net debt
2022
2,934
198
200
3,332
2
86
2,450
5
2,543
5,875
(336)
(1,450)
4,089
2023
2,933
194
38
3,165
671
89
1,635
3
2,398
5,563
(265)
(1,513)
3,785
AkzoNobel’s net debt is mainly denominated in euro.
Multi-currency revolving credit facility
We have a multi-currency revolving credit facility of €1.3 billion which runs until 2027. This
facility does not contain financial covenants or acceleration provisions that are based on
adverse changes in ratings or material adverse change. At year-end 2023 and 2022, this
facility has not been drawn.
Long-term borrowings
At year-end 2023, bonds issued amounted to €2,933 million (2022: €2,934 million); a
specification is included in the table below.
Bonds issued
in € millions, at December 31
1 3/4% 2014/24 (€500 million)
1 1/8% 2016/26 (€500 million)
1 1/2% 2022/28 (€600 million)
1 5/8% 2020/30 (€750 million)
2% 2022/32 (€600 million)
4% 2023/33 (€500 million)
Total
2022
499
498
597
745
595
—
2023
—
499
598
745
595
496
2,934
2,933
In May 2023, a bond was issued with a nominal value of €500 million, with a coupon of 4%,
maturing in 2033.
AkzoNobel Report 2023
For details on the exposure to interest rate and foreign currency risk, refer to Note 26
Financial risk management.
The average effective interest rate of the bonds included in long-term borrowings at year-
end 2023 was 2.0% (year-end 2022: 1.6%).
Aggregated maturities of long-term borrowings
in € millions
Bonds issued
Lease liabilities
Other long-term borrowings
Total
2025-2028
After 2028
1,097
158
15
1,270
1,836
36
23
1,895
The blended incremental borrowing rate applied to the lease liabilities at year-end 2023 was
2.4% (2022: 1.9%).
At year-end 2023 and 2022, none of the borrowings was secured by collateral.
Short-term borrowings
The current portion of long-term borrowings increased mainly due to maturing of a €500
million bond and other loans in 2024.
At year-end 2023, our debt to credit institutions amounted to €1,635 million (2022: €2,450
million). Debt to credit institutions includes our commercial paper program and short-term
bank loans. We have US dollar and euro commercial paper programs in place, which can
be used to the extent that the equivalent portion of the €1.3 billion multi-currency revolving
credit facility is not used. We had €0.8 billion commercial paper outstanding at year-end
2023 (2022: €1.3 billion) against an average interest rate of 4.1% (2022: 1.6%). At year-end
2023, we had short-term bank loans outstanding of €0.8 billion (2022: €1.1 billion) against
a 3-months Euribor plus a mark-up (2022: 3-months Euribor plus a mark-up). None of
these facilities contain financial covenants.
Short-term investments
At year-end 2023, we had short-term investments outstanding for an amount of €265
million (2022: €336 million). Short-term investments almost entirely consist of time deposits,
money market funds and other marketable securities with a life time at investment date
longer than three months but shorter than twelve months. For more information on credit
risk management, refer to Note 26 Financial risk management.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
157
Cash and cash equivalents
Cash and cash equivalents are specified in the table below.
Cash and cash equivalents
in € millions, at December 31
Cash on hand and in banks
Short-term investments with a life up to three months
Cash and cash equivalents in the balance sheet
Debt to credit institutions
Total per statement of cash flows
2022
922
528
1,450
(52)
1,398
2023
957
556
1,513
(60)
1,453
Deposits and money market funds within cash and cash equivalents almost entirely consist
of time deposits immediately convertible into known amounts of cash and with a maturity of
three months or less from the date of purchase, and marketable securities that can be
redeemed immediately when called.
We face cross-border foreign exchange controls and/or other legal restrictions in a few
countries that (currently) limit the ability to make these balances available for general use by
the group. Mainly as a result of these restrictions, at December 31, 2023, an amount of €57
million in cash and cash equivalents (2022: €11 million) and €3 million in short-term
investments (2022: €nil) was restricted. The vast majority of these funds are available for
use in the relevant subsidiaries’ day-to-day business.
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
158
Note 21: Trade and other payables
Note 23: Commitments
Trade and other payables
in € millions, at December 31
Trade payables
Taxes and social security contributions
Amounts payable to employees
Interest
FX contracts
Dividends
Other liabilities
Total
2022
2,206
184
234
58
60
4
55
2023
2,312
192
275
86
13
1
54
2,801
2,933
Trade and other payables can be broken down as per the above table. Other liabilities
consist of a large number of individually immaterial items.
Note 22: Cash flow
Operating activities in 2023 resulted in a cash inflow of €1,126 million (2022: cash inflow of
€263 million).
Changes in working capital as per consolidated statement of cash flows
in € millions
Trade and other receivables
Inventories
Trade and other payables
Total
2022
(95)
(134)
(280)
(509)
2023
(111)
131
234
254
The amounts in the table above cannot be reconciled directly to the respective balance
sheet positions. They reflect changes in balance sheet positions only to the extent these
have a cash flow impact, or they reverse the non-cash impact as included in profit for the
period. These amounts exclude non-cash movements such as unwinding of discount,
movements through other comprehensive income, acquisitions and divestments, and
changes in exchange rates.
AkzoNobel Report 2023
Purchase commitments for property, plant and equipment aggregated €18 million (2022:
€23 million).
Note 24: Related party transactions
We purchased and sold goods and services to various related parties in which we hold a
50% or less equity interest (associates). Such transactions were conducted at terms
comparable with transactions with third parties.
During 2023, we considered the members of the Executive Committee and the Supervisory
Board to be the key management personnel as defined in IAS 24 “Related parties”. For
details on their remuneration, as well as on shares held by members of the Supervisory
Board or Board of Management, refer to Note 25 Remuneration of the Supervisory Board
and the Board of Management. In the ordinary course of business, we also have
transactions with various organizations with which certain members of the Supervisory
Board or Executive Committee are associated.
For related party transactions with pension funds, refer to Note 14 Financial non-current
assets and Note 18 Post-retirement benefit provisions.
Note 25: Remuneration of the Supervisory Board and the Board of
Management
Total compensation for key management personnel expensed during the period amounted
to €19.2 million (2022: €13.2 million). An amount of €11.6 million relates to short-term
employee benefits (2022: €7.4 million); €1.0 million relates to post contract benefits and
other post contract compensation (2022: €0.8 million); €5.4 million relates to share-based
compensation (2022: €3.0 million); no payments relate to other long-term incentives (2022:
€nil); €1.2 million payments relate to payments upon termination of employment (2022: €2.0
million). In 2023, no charges were accrued which relate to taxation on excessive pay
(“Belasting heffing excessieve beloningsbestanddelen”) (2022: €1.0 million).
This compensation includes total remuneration for the members of the Supervisory Board
of €0.9 million (2022: €0.9 million) and for the members of the Board of Management of
€7.7 million (2022: €6.9 million). For more details on the remuneration of the individual
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
159
members of the Supervisory Board and the Board of Management reference is made to the
Remuneration report.
Note 26: Financial risk management
In accordance with the Articles of Association and good corporate governance practice, the
remuneration of Supervisory Board members is not dependent on the results of the
company. We do not grant share-based compensation to our Supervisory Board members.
An overview of shares held by the Supervisory Board members is provided on this page.
A similar overview is provided of the shares held by the Board of Management.
Loans
The company does not grant loans, advance payments or guarantees to members of the
Supervisory Board, members of the Executive Committee or any family members of such
persons.
Shares held by the members of the Supervisory Board
Number of shares at year-end
Ben Noteboom
Byron Grote*
Pamela Kirby
Dick Sluimers
Patrick Thomas
Jolanda Poots-Bijl
Ester Baiget
Hans Van Bylen
* In the form of ADRs.
Shares held by the Board of Management
Number of shares at year-end
Greg Poux-Guillaume*
Maarten de Vries
* Appointed CEO as per November 1, 2022, replacing Thierry Vanlancker.
2022
—
8,061
—
—
—
—
—
—
2022
—
21,766
2023
2,300
9,894
—
—
—
—
—
—
2023
1,046
22,558
Financial Risk Management Framework
Our activities expose us to a variety of financial risks: liquidity risk, credit risk and market
risk (including foreign exchange rate risk, interest rate risk and capital risk). These risks are
inherent to the way we operate as a multinational with a large number of locally operating
subsidiaries. Our overall risk management program seeks to identify, assess, and – if
necessary and possible – mitigate these financial risks in order to minimize potential
adverse effects on our financial performance.
Our risk mitigating activities include the use of derivative financial instruments to hedge
certain risk exposures. The Board of Management is ultimately responsible for risk
management. We centrally identify, evaluate and hedge financial risks, and monitor
compliance with the corporate policies approved by the Board of Management, except for
commodity risks, which are subject to identification, evaluation, hedging and monitoring in
the businesses. Next to our centralized Treasury organization in Amsterdam, we have
treasury hubs located in Brazil and China that are primarily responsible for regional cash
management and short-term financing. We do not allow extensive treasury operations
directly with external parties at subsidiary level.
Liquidity risk management
The primary objective of liquidity management is to provide for sufficient cash and cash
equivalents at all times and any place in the world to enable us to meet our payment
obligations. We aim for a well-spread maturity schedule of our long-term borrowings and a
strong liquidity position. At year-end 2023, we had €1.5 billion available as cash and cash
equivalents (2022: €1.2 billion) and €265 million available as short-term investments (2022:
€58 million), refer to Note 20 Net debt.
In addition, we have a multi-currency revolving credit facility of €1.3 billion which runs until
2027. This facility does not contain financial covenants or acceleration provisions that are
based on adverse changes in ratings or on other material adverse changes. At year-end
2023 and 2022, this facility had not been drawn. We have US dollar and euro commercial
paper programs in place, which can be used to the extent that the equivalent portion of the
€1.3 billion multi-currency revolving credit facility is not used. We had €0.8 billion
commercial paper outstanding at year end 2023 (2022: €1.3 billion) against an average
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
160
interest rate of 4.1% (2022: average interest rate of 1.6%). Further, at year-end 2023, we
had €0.8 billion short-term bank loans outstanding (2022: €1.1 billion) against 3-months
Maturity of liabilities and cash outflows
in € millions
At December 31, 2022
Borrowings
Interest on borrowings
Lease liabilities
Trade and other payables
FX contracts (hedges)
Outflow
Inflow
Total
At December 31, 2023
Borrowings
Interest on borrowings
Lease liabilities
Trade and other payables
FX contracts (hedges)
Outflow
Inflow
Total
Less than
1 year
Between 1
and 5 years
2,457
118
86
2,741
3,097
(3,055)
5,444
2,309
154
89
2,920
2,451
(2,450)
5,473
1,172
197
153
—
—
—
1,522
1,112
249
158
—
—
—
1,519
Over 5
years
1,962
84
45
—
—
—
2,091
1,859
182
36
—
—
—
2,077
Euribor plus a mark-up (2022: 3-months Euribor plus a mark-up). None of these facilities
contain financial covenants. The table on maturity of liabilities and cash outflows in this Note
shows our cash outflows per maturity group. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Credit risk management
Credit risk arises from financial assets such as cash and cash equivalents, deposits with
financial institutions, money market funds, trade receivables and derivative financial
instruments with a positive fair value. We have a credit risk management policy in place to
limit credit losses due to non-performance of financial counterparties and customers. We
monitor our exposure to credit risk on an ongoing basis at various levels. We only deal with
financial counterparties that have a sufficiently high credit rating. Generally, we do not
AkzoNobel Report 2023
require collateral in respect of financial assets. Investments in cash and cash equivalents,
short-term investments and transactions involving derivative financial instruments are
entered into with counterparties that have sound credit ratings and a good reputation.
Derivative transactions are concluded mostly with parties with whom we have contractual
netting agreements and ISDA agreements in place. We set limits per counterparty for the
different types of financial instruments we use. We closely monitor the acceptable financial
counterparty credit ratings and credit limits and revise where required in line with the market
circumstances. We do not expect non-performance by the counterparties for these
financial instruments. Due to our geographical spread and the diversity of our customers,
we were not subject to any significant concentration of credit risks at balance sheet date.
The credit risk from trade receivables is measured and analyzed by dedicated teams in the
businesses, mainly by means of ageing analysis, refer to Note 16 Trade and other
receivables. Additionally, trade receivables and financial assets measured at amortized cost
are subject to the expected credit loss impairment model either using the general or the
simplified approach. For more information on the applied impairment approaches per
financial asset type, refer to Note 1 Summary of material accounting policies.
The maximum exposure to credit risk is represented by the carrying value of financial assets
in the balance sheet.
At year-end 2023, the credit risk on consolidated level was €4.6 billion (2022: €4.6 billion)
for cash and cash equivalents, short-term investments, loans and trade and other
receivables. Our credit risk is well spread among both global and local counterparties. Our
largest counterparty risk amounted to €332 million at year-end 2023 (2022: €280 million).
Foreign exchange risk management
Trade and financing transactions
We operate in a large number of countries, where we have clients and suppliers, many of
whom are outside of the local functional currency environment. This creates currency
exposures which are partly netted out on group level. The purpose of our foreign currency
hedging activities is to protect us from the risk that the functional currency net cash flows
resulting from trade or financing transactions are adversely affected by changes in
exchange rates. Our policy is to hedge our transactional foreign exchange rate exposures
above predefined thresholds from recognized assets and liabilities. Hedge accounting is
generally not applied for foreign currency hedging activities, except for certain specific
forecasted transactions.
As from July 2022, cash flow hedge accounting was applied on a $450 million hedge for
foreign currency risk exposure related to the intended acquisition of Kansai Paint's African
Strategy | Sustainability | Leadership and governance | Financial information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
161
activities, which continued in 2023. In November 2023, the decision was made not to
proceed with the acquisition. Related to this hedge, a total loss of €36 million was recorded
in the year in the statement of income under financing expenses, which included a loss of
€46 million related to the recycling of the amount accumulated in the cash flow hedge
reserve through other comprehensive income.
In general, our forward exchange contracts have a maturity of less than one year. When
necessary, forward exchange contracts are rolled over at maturity. Currency derivatives are
not used for speculative purposes.
because of changes in market interest rates. Fixed rate debt results in fair value interest rate
risk. Floating rate debt results in cash flow interest rate risk. At the end of 2023, 62% of our
total debt consisted of fixed rate bonds (2022: 50%), 14% consisted of commercial paper
(2022: 22%) and 15% of short-term loans (2022: 19%). The fixed/floating ratio of our
outstanding bonds was 100% fixed (2022: 100% fixed). The weighted average maturity of
our outstanding bonds at year-end is 5.4 years (2022: 5.7 years). The remainder of our total
debt consisted of leases and other debt. For more information about our debt, refer to Note
20 Net debt. During 2023 and 2022, we have not used any interest rate derivatives.
Hedged notional amounts at year-end1
in € millions
US dollar
Pound sterling
Chinese yuan
Brazilian real
Thai baht
Other2
Total
Buy
2022
784
649
110
30
—
248
1,821
Sell
2022
692
10
157
64
117
641
1,681
Buy
2023
270
794
46
19
12
230
1,371
Sell
2023
658
—
58
57
114
543
1,430
1 No hedge accounting applied on these hedged notional amounts in 2023.
2 No individually significant position is included in 'Other', the amounts per currency are highly disaggregated.
Investments in foreign subsidiaries and associates
During 2023 and 2022, net investment hedge accounting was applied on hedges of certain
net investments in foreign operations, which were partly hedged. The main net investments
included were related to Chinese yuan, Brazilian real, Vietnamese dong and Indian rupee
(2022: Brazilian real, Chinese yuan, Indonesian rupiah and Indian rupee), which were
hedged with forward exchange contracts for the same currencies. The spot results related
to these hedges were recognized in other comprehensive income and accumulated in the
cumulative translation reserves. In addition, a net investment in Colombian peso was
hedged with a COP 330 billion bank loan. The spot result related to this hedge was
recognized in other comprehensive income and accumulated in the cumulative translation
reserves. At year-end 2023, the hedge of the net investment in Colombian peso was
outstanding. During 2023 and 2022, the hedges of net investments were fully effective.
Interest rate risk management
We are partly financed with debt in order to obtain more efficient leverage. Interest rate risk
is the risk that the fair value or future cash flows of a financial instrument will fluctuate
AkzoNobel Report 2023
Capital risk management
Our objectives when managing capital are to safeguard our ability to satisfy our capital
providers and to maintain a capital structure that optimizes our cost of capital. For this we
maintain an adequate financial strategy, with the objective to retain a strong investment
grade credit rating as assigned by the rating agencies Moody’s and Standard & Poor’s. The
capital structure can be altered, among others, by adjusting the amounts of dividends paid
to shareholders, return of capital to capital providers, or issuance of new debt or shares. In
May 2023, a bond was issued with a nominal value of €500 million, with a coupon of 4%,
maturing in 2033.
Consistent with other companies in the industry, we monitor capital headroom based on
the leverage ratio net debt/EBITDA for which we have set a target range of around 2. The
ratio was 2.7 at December 31, 2023 (December 31, 2022: 3.8). EBITDA amounted to
€1,386 million for 2023 (2022: €1,076 million). Net debt amounted to €3,785 million at year
end 2023 (year end 2022: €4,089 million).
Fair value of financial instruments and IFRS 9 categories
In the table “Fair value per financial instrument category” on the next page insight is
provided in the recognition of the respective financial instruments per IFRS 9 category. The
total carrying value is based on the accounting principles as outlined in Note 1 Summary of
material accounting policies. Financial instruments are recognized at fair value and
subsequently recognized either at fair value or at amortized cost, using the effective interest
method. The financial instruments accounted for at fair value through profit or loss are
derivative financial instruments and securities included in financial non-current assets and
other current liabilities, cash and cash equivalents and short-term investments. The
remaining financial instruments are accounted for at amortized cost.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
162
Fair value per financial instrument category
in € millions
2022 year-end
Financial non-current assets2
Trade and other receivables3
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables4
Total financial liabilities
2023 year-end
Financial non-current assets2
Trade and other receivables3
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables4
Total financial liabilities
Carrying value per IFRS9 category
Carrying
amount
Out of scope
of IFRS71
Measured at
amortized
cost
Measured at
fair value
through profit
or loss
Total carrying
value
Fair value of items
measured at
amortized cost
1,475
2,447
336
1,450
5,708
3,332
2,543
2,801
8,676
1,409
2,483
265
1,513
5,670
3,165
2,398
2,933
8,496
1,158
214
—
—
1,372
—
—
418
418
1,136
193
—
—
1,329
—
—
467
467
308
2,215
—
—
2,523
3,332
2,543
2,323
8,198
264
2,276
—
—
2,540
3,165
2,398
2,453
8,016
9
18
336
1,450
1,813
—
—
60
60
9
14
265
1,513
1,801
—
—
13
13
317
2,233
336
1,450
4,336
3,332
2,543
2,383
8,258
273
2,290
265
1,513
4,341
3,165
2,398
2,466
8,029
311
2,215
—
—
2,526
3,031
2,543
2,323
7,897
271
2,276
—
—
2,547
3,015
2,390
2,453
7,858
1 Mainly includes pension assets (refer to Note 14), (non) income tax related receivables (refer to Note 16), payables to employees and (non) income taxes payables (refer to Note 21).
2 €264 million (2022: €308 million) mainly relates to loans and receivables (refer to Note 14), €9 million (2022: €9 million) relates to other than financial instruments (refer to Note 14).
3 €2,276 million (2022: €2,215 million) relates to the remainder of trade and other receivables (refer to Note 16) and €14 million (2022: €18 million) relates to FX contracts.
4 €2,453 million (2022: €2,323 million) relates to the remainder of trade and other payables (refer to Note 21) and €13 million (2022: €60 million) relates to FX contracts.
The following valuation methods for financial instruments carried at fair value through profit
or loss are distinguished:
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable)
•
For the purpose of determining the fair value per financial instrument category, shown in the
column 'fair value', the following valuation methods were used:
A level 1 valuation method was used to estimate the fair value of the bonds issued included
in our long-term and short-term borrowings. The estimate is based on the quoted market
prices for the same or similar issues or on the current rates offered to us for debt with
similar maturities.
AkzoNobel Report 2023
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
163
A level 2 valuation method was used to determine the fair value of marketable securities
included in cash and cash equivalents and short-term investments by obtaining the market
price at reporting date. The fair value of foreign currency contracts and swap contracts was
determined by level 2 valuation techniques using market observable input (such as foreign
currency interest rates based on Reuters) and by obtaining quotes from dealers and
brokers. A level 2 valuation method was used to determine the fair value of time deposits
included in cash and cash equivalents and short-term investments using the market interest
rate. The carrying amounts of cash and banks, trade receivables less allowance for
impairment, other short-term borrowings and other current liabilities approximate fair value
due to the short maturity period of those instruments and were determined using level 2 fair
value methods.
A level 3 fair valuation method (discounted cash flow using applicable market interest rates
at balance sheet date) was used for the subordinated loan granted to the Pension Fund
APF in the Netherlands, resulting in a fair value of €98 million.
Sensitivities on financial instruments at year-end 2023
Sensitivity object
Sensitivity
Hypothetical impact
Foreign currencies:
We perform foreign currency sensitivity analysis by applying an adjustment
to the spot rates prevailing at year-end. This adjustment is based on
observed changes in the exchange rate in the past and management's
expectation for reasonably possible1 future movements over a longer term
from a sensitivity test perspective. We then apply the expected possible
volatility to revalue all monetary assets and liabilities (including derivative
financial instruments) in a currency other than the functional currency of the
subsidiary in the balance sheet at year-end. These effects are of a fairly
linear nature.
Interest rate:
We perform interest rate sensitivity analysis by applying an adjustment to
the interest rate curve prevailing at year-end. This adjustment is based on
observed changes in the interest rate in the past and management's
expectation for reasonably possible1 future movements over a longer term
from a sensitivity test perspective. We then apply the expected possible
volatility to revalue all interest bearing assets and liabilities. These effects are
of a fairly linear nature.
A 10% (2022: 10%) strengthening of the euro versus US dollar
Profit €22 million (2022: profit €9 million). Other comprehensive income €nil
(2022: loss €41 million)
A 10% (2022: 10%) strengthening of the euro versus the pound sterling
Loss €5 million (2022: profit €1 million)
A 10% (2022: 10%) strengthening of the euro versus Chinese yuan
Profit €1 million (2022: profit €1 million)
A 100 basis points (2022: 100 basis points) increase of EUR interest rates
Loss €15 million (2022: loss €16 million)
A 100 basis points (2022: 100 basis points) increase of USD interest rates
Profit €1 million (2022: profit €1 million)
A 100 basis points (2022: 100 basis points) increase of GBP interest rates
Profit €1 million (2022: profit €1 million)
1 This analysis does not indicate any probability of such changes occurring; nor does it preclude larger changes in any given period or longer term.
Master netting agreements
We enter into derivative transactions under International Swaps and Derivatives Association
(ISDA) master netting agreements. In general, under such agreements the amounts owed
by each counterparty on a single day in respect of transactions outstanding in the same
currency may be aggregated into a single net amount that is payable by one party to the
other. In certain circumstances – e.g. when a credit event such as a default occurs – all
outstanding transactions under the agreement may be terminated, the termination value is
assessed and a net amount is payable in settlement of the transactions. We have evaluated
the potential effect of netting agreements, including the effect of rights of set-off and
concluded the impact is immaterial. We did not offset any amounts regarding derivative
transactions.
AkzoNobel Report 2023
Note 27: Subsequent events
No significant subsequent events have been identified.
Strategy | Sustainability | Leadership and governance | Financial information
164
COMPANY FINANCIAL STATEMENTS
Statement of income
in € millions, for the year ended
December 31
Revenue
Gross profit
General and administrative expenses
Other results
Operating income
Financing income and expenses
Net income from subsidiaries
Profit before tax
Income tax
Net income
Note
A
4
(46)
(1)
B
D
(71)
440
2022
4
(47)
(43)
369
326
26
352
Balance sheet, before allocation of profit
2023
in € millions, at December 31
Note
2022
2023
—
(74)
—
(199)
693
—
(74)
(74)
494
420
22
442
Assets
Fixed assets
Intangible assets
Financial fixed assets*
Total fixed assets
Current assets
Short-term receivables*
Short-term investments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Subscribed share capital
Cash flow hedge reserve
Other legal reserves
Cumulative translation reserves
Actuarial gains and losses
Other reserves
Undistributed results
Shareholders’ equity
Provisions
Long-term liabilities*
Current liabilities
Short-term borrowings*
Other current liabilities
Total current liabilities
Total equity and liabilities
C
D
99
11,649
97
10,964
11,748
11,061
E
G
G
1,281
290
643
1,982
198
615
2,214
13,962
2,795
13,856
87
(34)
296
(656)
(2,902)
7,265
277
F
G
G
H
6,471
121
85
—
312
(711)
(3,013)
7,282
367
6,353
246
4,322
2
2,933
6,599
13,856
4,333
3
3,034
6,592
13,962
* Re-presented 2022 subsidiary balances to reflect contractual arrangements rather than the expected settlement date. Refer to note
D for more details.
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165
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Note A: General information
Akzo Nobel N.V. is a company headquartered in the Netherlands. The address of our
registered office is Christian Neefestraat 2, Amsterdam; the Chamber of Commerce
number is 09007809.
The financial statements of Akzo Nobel N.V. have been prepared in accordance with Part 9
of Book 2 of the Dutch Civil Code, making use of the option of Article 362 of the Code,
meaning that the accounting principles used are the same as for the Consolidated financial
statements. Foreign currency amounts have been translated, assets and liabilities have
been valued, and net income has been determined in accordance with the principles of
valuation and determination of income presented in Note 1 of the Consolidated financial
statements.
When parts of investments in consolidated subsidiaries are bought or sold, and such
transaction does not result in the loss of control, the difference between the consideration
paid or received and the carrying amount of the net assets acquired or sold, is directly
recognized in equity.
The remuneration paragraph is included in Note 25 of the Consolidated financial
statements. The number of employees having a contract with the Company at year-end
2023 was 5 (2022: 7). All employees are based in the Netherlands.
Note B: Financing income and expenses
Financing income and expenses are specified in the table below.
For the Company financial statements, 2022 revenue relates to revenue generated through
service contracts with third parties.
Financing income and expenses
in € millions
Financing income - third parties
Financing income - subsidiaries
Financing expense - third parties
Financing expense - subsidiaries
Net interest on net debt
Other items
Net other financing income / (expenses)
Total
2022
5
53
(75)
(39)
(56)
(15)
(15)
(71)
2023
27
62
(145)
(144)
(200)
1
1
(199)
Other items in 2023 and 2022 mainly include foreign currency results.
Consolidated subsidiaries are all entities (including intermediate subsidiaries) over which the
company has control. The company controls an entity when it is exposed, or has rights, to
variable returns from its involvement with the subsidiary and has the ability to affect those
returns through its power over the subsidiary. Subsidiaries are recognized from the date on
which control is transferred to the company or its intermediate holding entities. They are de-
recognized from the date that control ceases.
The company applies the acquisition method to account for acquiring subsidiaries. The
consideration transferred for the acquisition of a subsidiary is the fair value of assets
transferred by the company, liabilities incurred to the former owners of the acquiree and the
equity interests issued by the company. Identifiable assets acquired and liabilities and
contingent liabilities assumed in an acquisition are measured initially at their fair values at
the acquisition date, and are subsumed in the net asset value of the investment in
consolidated subsidiaries. Acquisition-related costs are expensed as incurred.
Investments in consolidated subsidiaries are measured using the equity method, based on
the measurement of assets, provisions and liabilities and determination of profit based on
the principles applied in the consolidated financial statements. When an acquisition of an
investment in a consolidated subsidiary is achieved in stages, any previously held equity
interest is remeasured to fair value on the date of acquisition. The remeasurement against
the book value is accounted for in the statement of income. When the company ceases to
have control over a subsidiary, any retained interest is remeasured to its fair value, with the
change in carrying amount to be accounted for in the statement of income.
AkzoNobel Report 2023
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166
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Note C: Intangible assets
Note D: Financial fixed assets
Intangible assets mainly include (internally developed) software.
Movements in financial fixed assets
Intangible assets
in € millions
Balance at January 1, 2022
Cost of (internally developed) intangibles
Accumulated amortization
Carrying value at January 1, 2022
Movements in 2022
Additions
Amortization
Total movements
Cost of (internally developed) intangibles
Accumulated amortization
Balance at December 31, 2022
Movements in 2023
Additions
Amortization
Impairments
Total movements
Cost of (internally developed) intangibles
Accumulated amortization
Balance at December 31, 2023
AkzoNobel Report 2023
Other intangibles
in € millions
Subsidiaries
Share in
capital
Loans*
Other non-
current
assets
Total
113
(22)
91
26
(18)
8
139
(40)
99
18
(19)
(1)
(2)
153
(56)
97
Balance at December 31, 2021
10,475
1,572
120
12,167
Impact IAS 29 Hyperinflation Türkiye
16
—
—
16
Balance at January 1, 2022
10,491
1,572
120
12,183
Investments/acquisitions/capital contributions
Divestments/capital repayments/dividends
Net income from subsidiaries
Equity-settled transactions
Cash flow hedges
Loans granted
Loans transferred from long-term to short-
term
Repayment of loans
Post-retirement benefits
Deferred tax assets
Changes in exchange rates
458
(1,058)
440
12
(3)
—
—
(290)
—
(180)
—
—
—
—
—
554
(460)
(48)
—
—
18
2
—
—
—
—
—
—
—
21
—
460
(1,058)
440
12
(3)
554
(460)
(48)
(290)
21
(162)
Balance at December 31, 2022
9,870
1,636
143
11,649
Investments/acquisitions/capital contributions
Divestments/capital repayments/dividends
Net income from subsidiaries
Equity-settled transactions
Cash flow hedges
Loans granted
Loans transferred from long-term to short-
term
Repayment of loans
Post-retirement benefits
Deferred tax assets
Changes in exchange rates
Balance at December 31, 2023
40
(287)
693
14
34
—
—
—
—
—
—
492
—
—
(1,082)
(385)
(111)
—
(55)
10,198
—
—
(26)
635
—
—
—
—
—
—
—
—
—
(12)
—
40
(287)
693
14
34
492
(1,082)
(385)
(111)
(12)
(81)
131
10,964
* Re-presented 2022 subsidiary balances to reflect contractual arrangements rather than the expected settlement date.
Investments in subsidiaries are measured using the equity method of accounting.
Strategy | Sustainability | Leadership and governance | Financial information
167
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Intercompany loans are priced at arm’s length, taking factors like the credit quality of
AkzoNobel and the counterparty, country and currency risks into consideration. The fair
value of the loans to subsidiaries approximates the book value.
Following an assessment in 2023, loans to subsidiaries, receivables from subsidiaries, and
the long- and short-term portion of debt to subsidiaries were presented to reflect the
contractual arrangements rather than the expected settlement dates. Therefore the
balances for 2022 were similarly re-presented.
Loans to subsidiaries that will mature between 2 and 5 years amounted to €616 million
(2022: €1,552 million). An amount of €19 million will mature after 5 years (2022: €84
million).
Other non-current assets include the subordinated loan granted to the Pension Fund APF
in the Netherlands valued at €90 million (2022: €89 million). Using a level 3 fair valuation
method (discounted cash flow), a fair value of €98 million (2022: €93 million) was
determined for this loan. For information on valuation methods, see Note 26 Financial risk
management of the Consolidated financial statements.
Other non-current assets further contain €39 million deferred tax assets (2022: €51 million).
Akzo Nobel N.V. is head of the Dutch fiscal unity for corporate income tax. Members of the
fiscal unity reflect taxes in their accounts as if they are taxable on a standalone basis and
are charged or credited accordingly by the company.
Note E: Short-term receivables
Short-term receivables
in € millions, at December 31
Receivables from subsidiaries*
FX contracts
Other receivables
Total
2022
1,260
18
3
1,281
2023
1,948
14
20
1,982
* Re-presented 2022 subsidiary balances to reflect contractual arrangements rather than the expected settlement date. Refer to note
D for more details.
Short-term receivables are expected to be settled within one year. Receivables from
subsidiaries include interest to be received on intercompany loans of €19 million (2022: €17
million) and the current portion of a loan to a subsidiary maturing in 2024 with a value of
€1.1 billion. The fair value of the receivables from subsidiaries approximates the book value.
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168
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Note F: Shareholders’ equity
Statement of changes in equity
in € millions
Balance at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye*
Balance at January 1, 2022
Changes in exchange rates in respect of subsidiaries
Cash flow hedges
Post-retirement benefits
Net income
Comprehensive income
Dividend
Equity-settled transactions
Share buyback
Addition to other reserves
Balance at December 31, 2022
Changes in exchange rates in respect of subsidiaries
Cash flow hedges
Post-retirement benefits
Net income
Comprehensive income
Dividend
Equity-settled transactions
Share buyback
Addition to other reserves
Balance at December 31, 2023
Legal reserves
Subscribed
share capital
Cash flow
hedges
Other
legal reserves
Cumulative
translation
reserves
Actuarial
gains
& losses
Other
reserves
Undistributed
results
Shareholders'
equity
91
—
91
—
—
—
—
—
—
—
(4)
—
87
—
—
—
—
—
—
—
(2)
—
85
(19)
—
(19)
—
(15)
—
—
(15)
—
—
—
—
(34)
—
34
—
—
34
—
—
—
—
—
275
—
275
—
—
—
—
—
—
—
—
21
296
—
—
—
—
—
—
—
—
16
312
(493)
—
(493)
(163)
—
—
—
(163)
—
—
—
—
(656)
(55)
—
—
—
(55)
—
—
—
—
(2,613)
—
(2,613)
—
—
(289)
—
(289)
—
—
—
—
(2,902)
—
—
(111)
—
(111)
—
—
—
—
7,435
16
7,451
—
—
—
—
—
—
14
(656)
456
7,265
—
—
—
—
—
—
17
2
(2)
(711)
(3,013)
7,282
749
—
749
—
—
—
352
352
(347)
—
—
(477)
277
—
—
—
442
442
(338)
—
—
(14)
367
5,425
16
5,441
(163)
(15)
(289)
352
(115)
(347)
14
(660)
—
4,333
(55)
34
(111)
442
310
(338)
17
—
—
4,322
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 "Financial Reporting in Hyperinflationary Economies" has been applied for our activities in Türkiye as from January 1, 2022. Refer to Note 7 Financing income and expenses in the
Consolidated financial statements for details on the financial impact from applying IAS 29. The opening balance adjustment includes a tax charge of €4 million.
AkzoNobel Report 2023
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169
NOTES TO THE COMPANY FINANCIAL STATEMENTS
The holders of common shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at the Annual General Meeting of shareholders.
The holders of the priority shares are entitled to a dividend of 6% per share or the statutory
interest in the Netherlands, whichever is lower, plus any accrued and unpaid dividends.
They are entitled to 800 votes per share (in accordance with the 800 times higher nominal
value per share) at the Annual General Meeting of shareholders. In addition, the holders of
priority shares have the right to draw up binding lists of nominees for appointment to the
Supervisory Board and the Board of Management; amendments to the Articles of
Association are subject to the approval of the Meeting of Holders of Priority Shares.
Priority shares may only be transferred to a transferee designated by a Meeting of Holders
of Priority Shares and against payment of the par value of the shares, plus interest at the
rate of 6% per annum or the statutory interest in the Netherlands, whichever is lower, for
the period between the beginning of the year and the date of transfer. There are no
restrictions on voting rights of holders of common or priority shares. The Articles of
Association set out procedures for exercising voting rights. The Annual General Meeting of
shareholders has resolved in 2023 to authorize the Board of Management for a period of
18 months (i) to issue shares (or grant rights to shares) in the capital of the company up to a
maximum of 10% of the total number of shares outstanding (and to restrict or exclude the
pre-emptive rights to those shares) and (ii) to acquire shares in the capital of the company,
provided that the shares that will at any time be held will not exceed 10% of the issued
share capital. The issue or repurchase of shares requires the approval of the Supervisory
Board.
Unrestricted reserves at year-end
in € millions
Shareholders' equity at year-end
Subscribed share capital
Subsidiaries' restrictions to transfer funds
Reserve for development costs
Unrestricted reserves
2022
4,333
(87)
(190)
(106)
3,950
2023
4,322
(85)
(213)
(99)
3,925
In February 2022, a €500 million share buyback program was announced, which was
completed in 2022. As at December 31, 2022, a total of 7.3 million shares had been
acquired under this program, of which 3.4 million were cancelled. The remaining 3.9 million
shares were cancelled in 2023. For further details on weighted average number of shares,
refer to Note 9 Earnings per share in the Consolidated financial statements.
Of the shareholders’ equity of €4.3 billion (2022: €4.3 billion), €3.9 billion (2022: €4.0 billion)
was unrestricted and available for distribution, subject to the relevant provisions of our
Articles of Association and Dutch law.
AkzoNobel Report 2023
Legal reserves include the €213 million reserve relating to earnings retained by subsidiaries
after the year 1983, to the extent that there are limitations to arrange profit distributions,
and a €99 million reserve for capitalized development costs.
Dividend
Our dividend policy is to pay a stable to rising dividend.
In 2023, an interim dividend of €0.44 (2022: €0.44) per common share was paid. We
propose a 2023 final dividend of €1.54 (2022: €1.54) per common share, which would
equal a total 2023 dividend of €1.98 (2022: €1.98).
Note G: Net debt
Analysis of net debt by category
in € millions, at December 31
Bonds issued
Debt to subsidiaries*
Long-term borrowings
Current portion of long-term borrowings
Debt to credit institutions
Debt to subsidiaries*
Other
Short-term borrowings
Total borrowings
Short-term investments
Cash and cash equivalents
Net debt
2022
2,934
100
3,034
—
2,399
4,068
4
6,471
9,505
(290)
(643)
8,572
2023
2,933
—
2,933
500
1,574
4,276
3
6,353
9,286
(198)
(615)
8,473
* Re-presented 2022 subsidiary balances to reflect contractual arrangements rather than the expected settlement date. Refer to note
D for more details.
Multi-currency revolving credit facility
We have a multi-currency revolving credit facility of €1.3 billion which runs until 2027. This
facility does not contain financial covenants or acceleration provisions that are based on
adverse changes in ratings or material adverse change. At year-end 2023 and 2022, this
facility had not been drawn.
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170
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Long-term borrowings
At year-end 2023, bonds issued amounted to €2,933 million (2022: €2,934 million); a
specification is included in the table below.
Bonds issued
in € millions, at December 31
1 3/4% 2014/24 (€500 million)
1 1/8% 2016/26 (€500 million)
1 1/2% 2022/28 (€600 million)
1 5/8% 2020/30 (€750 million)
2% 2022/32 (€600 million)
4% 2023/33 (€500 million)
Total
2022
499
498
597
745
595
—
2023
—
499
598
745
595
496
2,934
2,933
For the fair value of the bonds issued, refer to Note 26 Financial risk management in the
Consolidated financial statements. We estimated the fair value of the bonds issued based
on the quoted market prices (level 1) for the same or similar issues or on the current rates
offered to us for debt with similar maturities. At year-end 2023, the fair value of the bonds
included in long-term and short-term borrowings was €3,275 million (2022: €2,633 million).
In May 2023, a bond was issued with a nominal value of €500 million, with a coupon of 4%,
maturing in 2033.
Short-term investments
At year-end 2023, we had short-term investments outstanding for an amount of €198
million (2022: €290 million). Short-term investments almost entirely consist of time deposits,
money market funds and marketable securities with a lifetime at investment date longer
than three months but shorter than twelve months.
Cash and cash equivalents
Cash and cash equivalents are specified in the table below.
Cash and cash equivalents
in € millions, at December 31
Cash on hand and in banks
Deposits and money markets funds with a maturity less than
three months
Included under cash and cash equivalents in the
balance sheet
2022
293
350
643
2023
334
281
615
Deposits and money market funds within cash and cash equivalents almost entirely consist
of time deposits immediately convertible into known amounts of cash and with a maturity of
three months or less from the date of purchase and marketable securities that can be
redeemed immediately when called.
The average effective interest rate of the bonds included in long-term borrowings
outstanding at year-end 2023 was 2% (year-end 2022: 1.6%).
Note H: Other current liabilities
At year-end 2023 and 2022, none of the borrowings was secured by collateral.
Short-term borrowings
In November 2024, a bond of €500 million will mature. This bond is classified as short-term
borrowing. At year-end 2023 and 2022, none of the borrowings was secured by collateral.
At year-end 2023, our debt to credit institutions amounted to €1,574 million (2022: €2,399
million). For the fair value of the debt to credit institutions, refer to Note 26 Financial risk
management in the Consolidated financial statements. Debt to credit institutions includes
our commercial paper program. We have US dollar and euro commercial paper programs
in place, which can be used to the extent that the equivalent portion of the €1.3 billion
multi-currency revolving credit facility is not used. We had €0.8 billion commercial paper
outstanding at year-end 2023 (2022: €1.3 billion) against an average interest rate of 4.1%
(2022: 1.6%). At year-end 2023, we had short-term bank loans outstanding of €800 million
(2022: €1.1 billion) against a 3-month Euribor plus a mark-up rate (2022: 3-month Euribor
plus a mark-up rate). None of these facilities contain financial covenants.
AkzoNobel Report 2023
Other current liabilities
in € millions, at December 31
Payables to subsidiaries*
FX contracts
Other suppliers
Interest payable
Other liabilities
Total
2022
23
60
2
33
3
121
2023
167
12
12
46
9
246
* The fair value of the payables to subsidiaries approximates the book value.
Other current liabilities are expected to fall due in less than one year.
Strategy | Sustainability | Leadership and governance | Financial information
171
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Note I: Financial instruments
Note K: Independent auditor’s fees
At year-end 2023, Akzo Nobel N.V. had foreign exchange contracts outstanding to buy
currencies for a total of €1.3 billion (year-end 2022: €1.7 billion), while contracts to sell
currencies totaled €1.3 billion (year-end 2022: €1.5 billion). The contracts mainly relate to
US dollars, pound sterling and Thai baht and all have maturities within one year. These
contracts were partly offset by the foreign exchange contracts concluded with subsidiaries;
fair value changes are recognized in the statement of income, or recognized in other
comprehensive income in case hedge accounting is applied. For information on risk
exposure and risk management, see Note 26 Financial risk management in the
Consolidated financial statements.
Note J: Contingent liabilities
Akzo Nobel N.V. is parent of the group’s fiscal unity in the Netherlands, and is therefore
liable for the liabilities of said fiscal unity as a whole.
Akzo Nobel N.V. has declared in writing that it accepts joint and several liability for
contractual debts of certain Dutch and Irish consolidated companies (Article 403 of Book 2
of the Dutch Civil Code and section 357(1) of the Irish Companies Act 2014, respectively).
These debts at year-end 2023 aggregate to €0.6 billion (2022: €0.6 billion), and are
included in the consolidated balance sheet.
Akzo Nobel N.V. has withdrawn its declarations of joint and several liability under Article 403
of Book 2 of the Dutch Civil Code for certain Dutch former Specialty Chemicals subsidiaries
divested as per October 1, 2018, and is following the procedures to terminate its residual
liability under those declarations under Article 404 of Book 2 of the Dutch Civil Code. One
objection against the termination of residual liability is still pending and AkzoNobel, Nouryon
and Nobian continue to cooperate to get this resolved.
Additionally, at year-end 2023, guarantees were issued on behalf of consolidated
companies for an amount of €0.4 billion (2022: €0.4 billion). The debts and liabilities of the
consolidated companies underlying these guarantees are included in the consolidated
balance sheet.
Akzo Nobel N.V. and two of its subsidiaries are currently defending 2 claims brought by
INPEX Operations Australia Pty Ltd and JKC Australia LNG Pty Ltd relating to the Ichthys
Onshore Project in Darwin, Western Australia. A trial has been listed in the Federal Court of
Australia, commencing June 17, 2024. The claims are contested and AkzoNobel denies
liability in respect of both of these claims.
AkzoNobel Report 2023
Our independent auditor, PricewaterhouseCoopers Accountants N.V., has rendered, for the
period to which the audit of the financial statements relates, in addition to the audit of the
consolidated financial statements, mainly statutory audit services for controlled entities.
2023
Total
9.5
0.3
—
—
9.8
2022
Total
9.2
0.4
—
—
9.6
Fees PricewaterhouseCoopers Accountants N.V. 2023
in € millions
Audit of the financial statements
Other audit services
Tax services
Other non-audit services
Total
In the
Netherlands
Network
outside the
Netherlands
4.3
0.2
—
—
4.5
5.2
0.1
—
—
5.3
Fees PricewaterhouseCoopers Accountants N.V. 2022
in € millions
Audit of the financial statements
Other audit services
Tax services
Other non-audit services
Total
In the
Netherlands
Network
outside the
Netherlands
3.7
0.3
—
—
4.0
5.5
0.1
—
—
5.6
Amsterdam, February 26, 2024
The Board of Management
The Supervisory Board
Greg Poux-Guillaume
Maarten de Vries
Ben Noteboom
Ester Baiget
Hans Van Bylen
Byron Grote
Pamela Kirby
Dick Sluimers
Patrick Thomas
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OTHER INFORMATION
Proposal for profit allocation
With due observance of Dutch law and the Articles of Association, it is proposed that net
income of €104 million is carried to the other reserves. Furthermore, with due observance
of article 43, paragraph 7, it is proposed that dividend on priority shares of €1,152 and on
common shares of €338 million (to be increased by dividend on shares issued in 2024
before the ex-dividend date) will be distributed. Following the acceptance of this proposal,
the holders of common shares will receive a total dividend of €1.98 per share, of which
€0.44 was paid earlier as an interim dividend. The final dividend of €1.54 per share will be
made available from May 7, 2024.
43.9
Without prejudice to the provisions of article 42 and paragraph 8 of this article, the Annual
General Meeting of shareholders may decide on the utilization of reserves only on the
proposal of the Board of Management approved by the Supervisory Board.
Article 44
44.7
Cash dividends by virtue of paragraph 4 of article 20, article 42, or article 43 that have not
been collected within five years of the commencement of the second day on which they
became due and payable shall revert to the company.
Special rights to holders of priority shares
The priority shares are held by “Stichting Akzo Nobel” (Foundation Akzo Nobel), whose
board is composed of the members of the Supervisory Board who are not members of the
Audit Committee. They each have one vote on the board of the Foundation.
The Meeting of Holders of Priority Shares has the right to draw up binding lists of nominees
for appointment to the Supervisory Board and the Board of Management. Amendments to
the Articles of Association are subject to the approval of this meeting.
Profit allocation and distributions
The following articles of our articles of association govern profit allocation and distribution:
Article 43
43.6
The Board of Management shall be authorized to determine, with the approval of the
Supervisory Board, what share of profit remaining after application of the provisions of the
foregoing paragraphs shall be carried to reserves. The remaining profit shall be placed at
the disposal of the Annual General Meeting of shareholders, with due observance of the
provisions of paragraph 7, it being provided that no further dividends shall be paid on the
preferred shares.
43.7
From the remaining profit, the following distributions shall, to the extent possible, be made
as follows:
(a) To the holders of priority shares: 6% per share or the statutory interest referred to in
paragraph 1 of article 13, whichever is lower, plus any accrued and unpaid dividends
(b) To the holders of common shares: a dividend of such an amount per share as the
remaining profit, less the aforesaid dividends and less such amounts as the Annual
General Meeting of shareholders may decide to carry to reserves, shall permit
43.8
Without prejudice to the provisions of paragraph 4 of this article and of paragraph 4 of
article 20, the holders of common shares shall, to the exclusion of everyone else, be
entitled to distributions made from reserves accrued by virtue of the provision of paragraph
7b of this article.
AkzoNobel Report 2023
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173
OTHER INFORMATION
Independent auditor’s
report
To: The Annual General Meeting and the Supervisory
Board of Akzo Nobel N.V.
Report on the audit of the financial
statements 2023
Our opinion
In our opinion:
•
The Consolidated financial statements of Akzo Nobel
N.V. together with its subsidiaries ("the Group") give a
true and fair view of the financial position of the Group
as at December 31, 2023, and of its result and cash
flows for the year then ended in accordance with
International Financial Reporting Standards as
adopted in the European Union ("EU-IFRS") and with
Part 9 of Book 2 of the Dutch Civil Code
The Company financial statements of Akzo Nobel N.V.
("the Company") give a true and fair view of the
financial position of the Company as at December 31,
2023, and of its result for the year then ended in
accordance with Part 9 of Book 2 of the Dutch Civil
Code.
•
What we have audited
We have audited the accompanying financial statements
2023 of Akzo Nobel N.V., Amsterdam, the Netherlands.
The financial statements comprise the Consolidated
financial statements of the Group and the Company
financial statements.
AkzoNobel Report 2023
The Consolidated financial statements comprise:
•
The Consolidated balance sheet as at December
31, 2023
The following statements for 2023: the Consolidated
statement of income, of comprehensive income, of
changes in equity and of cash flows
The Notes to the Consolidated financial statements,
including a summary of material accounting policies
and other explanatory information
•
•
The Company financial statements comprise:
•
•
•
The Balance sheet as at December 31, 2023
The Statement of income for the year then ended
The notes, comprising a summary of the accounting
policies applied and other explanatory information
The financial reporting framework applied in the
preparation of the financial statements is EU-IFRS and the
relevant provisions of Part 9 of Book 2 of the Dutch Civil
Code for the Consolidated financial statements and Part 9
of Book 2 of the Dutch Civil Code for the Company
financial statements.
The basis for our opinion
We conducted our audit in accordance with Dutch law,
including the Dutch Standards on Auditing. We have
further described our responsibilities under those
standards in the section "Our responsibilities for the audit
of the financial statements" of our report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of Akzo Nobel N.V. in accordance
with the European Union "Regulation on specific
requirements regarding statutory audit of public-interest
entities", the "Wet toezicht accountantsorganisaties" (Wta,
Audit firms supervision act), the "Verordening inzake de
onafhankelijkheid van accountants bij
assuranceopdrachten" (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to
independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have
complied with the "Verordening gedrags- en
beroepsregels accountants" (VGBA, Dutch Code of
Ethics).
Our audit approach
We designed our audit procedures with respect to the key
audit matters, fraud and going concern, and the matters
resulting from that, in the context of our audit of the
financial statements as a whole and in forming our opinion
thereon. The information in support of our opinion, such as
our findings and observations related to individual key
audit matters, the "audit approach fraud risks" and the
"audit approach going concern", was addressed in this
context, and we do not provide separate opinions or
conclusions on these matters.
Overview and context
Akzo Nobel N.V. is a global paints and coatings company
headquartered in the Netherlands. Our group audit scope
and approach are set out in the section "The scope of our
group audit". In our audit we paid specific attention to the
areas of focus driven by the operations of the Group, as
set out below.
As part of designing our audit, we determined materiality
and assessed the risk of material misstatement in the
financial statements. In particular, we considered where
the Board of Management made important judgments, for
example in respect of significant accounting estimates that
involved making assumptions and considering future
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174
OTHER INFORMATION
events that are inherently uncertain. In addition, we paid
attention to, among others, the assumptions underlying
the physical and transition risk related to climate change.
In Note 1 of the Consolidated financial statements, the
Group describes areas of judgment in applying accounting
policies and the key sources of estimation uncertainty. We
considered the valuation of the post-retirement benefit
provisions and the valuation of deferred tax assets to be
key audit matters as set out in the section “Key audit
matters” of this report, given the significant estimation
uncertainty, the judgmental nature, the magnitude of the
balances involved and the related higher inherent risk of
material misstatement.
The Group executed over the past years a wide range of
(finance) transformation projects. These projects continued
in 2023, with the goal to align to the Group’s evolving
operating model, focusing on end-to-end processes and
to increase operational efficiencies and effectiveness.
Inherently, transformation processes encompass changes
in the organization, systems, processes and controls.
We therefore evaluated the impact of these transformation
projects on our audit. Due to the significance to the Group
and the impact on our audit procedures, we included
“Ongoing transformation projects of the organization,
systems, processes and controls” as a key audit matter,
as set out in the section “Key audit matters” of this report.
Global market conditions were volatile in 2023 in terms of
consumer confidence, (hyper) inflation and geopolitical
developments. This resulted in different trends on the
various (geographical) business areas of the Group.
Certain areas showed recovery in terms of revenue and
volume growth, other markets faced price pressure and/or
the impact of softening demand. Total revenue showed
relatively low volatility on a year-on-year basis. Overall,
operating income increased.
We considered the impact of these global geopolitical and
macro-economic developments on our audit approach,
including our scoping, materiality and risk assessment.
Furthermore, we assessed the impact on significant
AkzoNobel Report 2023
management accounting judgments and future business
and cash flow projections underpinning asset
recoverability assessments, deferred tax asset
recoverability, key assumptions used in the valuation of
post-retirement benefit provisions, and the going concern
assumption. We concluded the impact of the geopolitical
and macro-economic developments on the Group’s
results of operations to be an area of focus that is not a
separate key audit matter.
Climate change is an area of interest to a wide group of
stakeholders. Akzo Nobel N.V. assessed the potential
effects of climate change and developed plans to meet the
Group’s announced emissions reduction commitments.
The Group considered, among others, physical risks, such
as those associated with water scarcity, flooding and
weather events, as well as transition risks that can lead to
changes in technology, market dynamics and regulations.
Management also assessed the resulting impact on the
financial position, including underlying assumptions and
estimates. As part of our audit risk assessment, we gained
an understanding of the Group’s strategy and
sustainability targets, evaluated the potential impact on the
financial statements and discussed the assessment and
governance thereof with management. We concluded the
impact of climate change to be an area of focus that is not
a key audit matter.
Other areas of focus that we do not consider to be key
audit matters were related to the impairment testing of
goodwill and other intangibles with indefinite useful lives,
accounting for the unwinding of the cash flow hedge in
relation to the previously anticipated acquisition of Kansai
Paints Africa, testing of the underlying assumptions of the
other provisions and testing of the effectiveness of
information technology general controls (ITGCs).
We ensured that the audit teams at both group and
component level included the appropriate skills and
competences which are needed for the audit of the Group.
We therefore included in our team experts in the areas of
pensions, share-based payments and valuations and
specialists in the areas of tax, IT and treasury.
The outline of our audit approach was as follows:
Materiality
• Overall materiality: €41.5 million
(2022: €43.75 million)
Audit scope
• We conducted audit work at 48
components in 18 countries
(2022: 49 components in 18
countries)
•
•
Site reviews were physically
conducted in five countries
(2022: four countries) and
virtually to one country (2022:
three countries). In total, this
covered 29 components (2022:
39 components)
Audit coverage: 62% of
consolidated revenue (2022:
64%), 71% of consolidated total
assets (2022: 72%) and 79% of
consolidated profit before tax
(2022: 67%)
Key audit matters
• Ongoing transformation projects
of the organization, systems,
processes and controls
•
Valuation of post-retirement
benefit provisions
•
Valuation of deferred tax assets
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Materiality
The scope of our audit was influenced by the application
of materiality, which is further explained in the section "Our
responsibilities for the audit of the financial statements".
Based on our professional judgment, we determined
certain quantitative thresholds for materiality, including the
overall materiality for the financial statements as a whole,
as set out in the table below. These, together with
qualitative considerations, helped us to determine the
nature, timing and extent of our audit procedures on the
individual financial statement line items and disclosures
and to evaluate the effect of identified misstatements, both
individually and in aggregate, on the financial statements
as a whole and on our opinion.
Overall
group
materiality
Basis for
determining
materiality
Rationale for
benchmark
applied
€41.5 million (2022: €43.75 million)
We used our professional judgment to
determine overall materiality. As a basis
for our judgment, we used 5% of a
three-year average of profit before tax,
including the current year results.
We used profit before tax as the primary
benchmark, a generally accepted
auditing practice, based on our analysis
of the common information needs of
users of the financial statements. On this
basis, we believe that profit before tax is
the most relevant metric for the financial
performance of the Group and is a
metric widely used within the industry.
Consistent with the methodology applied
in prior year, we applied a three-year
average of profit before tax.
AkzoNobel Report 2023
In evaluating the approach taken, we
considered among others, the impact of
the macro-economic developments,
including hyperinflation, and geopolitical
tension and conflicts across the globe,
as described in the section “Overview
and context” and the impact thereof on
the financial results of the Group in
addition to management's expectations
and budget in the coming years. We
reaffirmed that applying a three-year
average is an appropriate basis for the
current year audit that appropriately
reflects the Group’s scale of operations
for the year. Applying a multi-year
average benchmark for materiality
responds to adverse economic trends
and volatility in profit before tax from year
to year. On this basis, we concluded that
applying a three-year average is a more
appropriate basis for the current year
audit, and also better reflects the
Group’s scale of operations for the year.
Furthermore, we used a 5% threshold,
based on our professional judgment,
noting it is within the range of commonly
acceptable thresholds and the
predominant threshold used for
companies with similar characteristics
Based on our judgment, we allocate
materiality to each component in our
audit scope that is less than our overall
group materiality. The range of materiality
allocated across components was
between €8 million and €39 million.
We also take misstatements and/or possible
misstatements into account that, in our judgment, are
material for qualitative reasons.
We agreed with the Audit Committee and Supervisory
Board that we would report to them misstatements
identified during our audit above €2 million (2022: €2
million), as well as misstatements below that amount that,
in our view, warranted reporting for qualitative reasons.
The scope of our group audit
Akzo Nobel N.V. is the parent company of a group of
entities. It is managed by the Board of Management and
Executive Committee. The financial information of this
Group is included in the Consolidated financial statements
of Akzo Nobel N.V.
We tailored the scope of our audit to ensure that we, in
aggregate, performed sufficient work on the financial
statements to enable us to provide an opinion on the
financial statements as a whole, taking into account the
management structure of the Group, the nature of
operations of its components, the accounting processes
and controls, and the markets in which the components of
the Group operate. In establishing the overall group audit
strategy and plan, we determined the type of work
required to be performed at component level by the group
engagement team and by each component auditor.
The group audit included 21 components which were
subjected to audits of their complete financial information,
selected on the basis of the relative size of their
operations. None of the components are individually
financially significant to the Group. We further subjected 17
components to specific focused audit procedures on
individual financial statement line items, such as revenue,
cost of sales, inventories, trade and other receivables,
post-retirement benefit provisions, tax, cash and cash
equivalents and short-term investments, based on the
relative size or related higher inherent risk of material
Component
materiality
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OTHER INFORMATION
misstatement. Additionally, we selected ten components
for audit procedures to achieve appropriate audit coverage
on specific financial line items in the Consolidated financial
statements.
In total, in performing these procedures, we achieved the
following coverage on the financial line items:
Revenue
Total assets
Profit before tax
62%
71%
79%
None of the remaining components represented more
than 5% of total group revenue, total group assets or profit
before tax. For those remaining components we
performed, among other procedures, analytical
procedures to corroborate our assessment that there was
no significant risk of material misstatements within those
components.
For all components we used component auditors who are
familiar with the local laws and regulations to perform the
audit work. We collectively performed hard close audit
procedures on the interim October balance sheet positions
and results. These hard close audit procedures included
substantive audit work on certain material balances and
transactions. Top-up testing was performed at year-end to
cover the full-year period.
Where component auditors performed the work, we
determined the level of involvement we needed to have in
their work to be able to conclude whether we had
obtained sufficient and appropriate audit evidence as a
basis for our opinion on the consolidated financial
statements as a whole.
We issued instructions to the component audit teams in
our audit scope. These instructions included, among
others, our risk analysis, materiality and the scope of the
work. We explained to the component audit teams the
structure of the Group, the main developments that were
relevant for the component auditors, the risks identified,
AkzoNobel Report 2023
the materiality levels to be applied and our global audit
approach. We had individual calls with each of the in-
scope component audit teams throughout the audit.
During these calls, we discussed the significant accounting
and audit matters identified by the component auditors,
their reports, the findings of their procedures, and other
matters that could be of relevance for the financial
statements.
The group engagement team attended physical or virtual
site review meetings with a selection of the component
teams and local management. During these meetings we
discussed the strategy and financial performance of the
local businesses, as well as the audit plan and execution,
significant risks and other relevant audit topics. The
financially most significant components are selected on a
rotational basis (at least every three years) and other
components are selected, depending on specific
considerations which include, among others, audit
observations, specific risks identified and other major
events. In the current year, components in the following
countries were selected: United States, China, Germany,
United Kingdom, Italy and Indonesia.
The group engagement team performed the audit work on
the consolidation, financial statement disclosures and a
number of more complex areas and processes controlled
and monitored centrally by Akzo Nobel N.V. These include
impairment testing of goodwill and other intangible assets
with indefinite useful lives, testing of purchase price
allocation for the acquisition of the Huarun business in
China, share-based payments, valuation of deferred tax
assets, group level other provisions and contingent
liabilities, treasury, ITGCs and the Company financial
statements. By performing the procedures outlined above
at the components, combined with additional procedures
exercised at group level, we have been able to obtain
sufficient and appropriate audit evidence on the Group’s
financial information, to provide a basis for our opinion on
the financial statements.
Audit approach fraud risks
As in all of our audits, we identified and assessed the risk
of material misstatement of the financial statements due to
fraud. Together with our forensic specialists, we evaluated
fraud risk factors with respect to financial reporting fraud,
misappropriation of assets and bribery and corruption.
As a starting point, we obtained an understanding of the
entity and its environment and the elements of the system
of internal control relating to fraud risks. We conducted
interviews with members of the Board of Management, the
Executive Committee, the Supervisory Board and others
within the Group, including the Internal Audit and Integrity
and Compliance function, to obtain an understanding of
the Group’s fraud risk assessment and the processes for
identifying and responding to the risk of fraud and the
internal control that management has established to
mitigate these risks. Akzo Nobel N.V. has an integrity and
compliance program, which includes a governance and
organization structure, policies and procedures around risk
management, policy management, communication,
training and education, a competition law program, privacy
program, anti-bribery and anti-corruption program, third
party risk management program, monitoring, grievance
and investigation procedures, and reporting. The Group
also has an Export Controls and Sanctions team in place.
We considered management’s own risk assessment and
response to the risk of fraud, management’s monitoring of
the system of internal control and how the Supervisory
Board exercises oversight, as well as the outcomes
thereof.
As described in the auditing standards, management
override of controls and risk of fraud in revenue recognition
are presumed significant audit risks.
Inherently, management of a company is in a unique
position to perpetrate fraud because of its ability to
manipulate accounting records and prepare fraudulent
financial statements by overriding controls that otherwise
appear to be operating effectively. The ongoing
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transformation projects of the organization, systems,
processes and controls, which we consider a key audit
matter, also inherently, increases the risk of management
override of controls. We addressed this risk by, among
other procedures, evaluating journal entries, transactions
outside the normal course of business and considering
whether there was evidence of potential bias by
management when making assumptions and estimates
that may represent a risk of material misstatement due to
fraud. We tested journal entries by selecting, on a risk-
based approach through data analysis, certain entries
posted along with sufficient and appropriate supporting
evidence. To address the assessed risk of significant
transactions outside the normal course of business, we
performed, among others, procedures over the acquisition
of the Huarun business in China. The audit procedures to
respond to the assessed risk of management bias include,
among others, evaluation of the design and the
implementation of internal controls that intend to mitigate
fraud risks (including management’s fraud risk
assessment, the Code of Conduct and whistle blower
procedures), review of legal confirmations and
correspondence with regulatory bodies, and retrospective
review of prior year’s estimates. For examples of key
assumptions and estimates, refer to the key audit matters
“Valuation of post-retirement benefit provisions” and
“Valuation of deferred tax assets”.
Furthermore, we, together with our forensic specialists,
assessed matters reported through the Group’s SpeakUp!
program and complaints procedures and results of
management’s investigation of such matters if deemed
applicable, and discussed this with the Audit Committee.
With regard to the risk of fraud in revenue recognition,
based on our risk assessment procedures, we concluded
that this risk is related to the occurrence of revenue
transactions, due to the Group’s strategy to continuously
grow and expand market share. We performed
procedures over this risk, including evaluation of the
design and implementation of relevant internal controls,
tracing a sample of revenue transactions to the supporting
documents, and validating unusual journal entries.
AkzoNobel Report 2023
We incorporated an element of unpredictability in our
audit. During the entire audit, we remained alert to
indications of fraud and considered the impact on our
audit, if any. Furthermore, we considered the outcome of
our other audit procedures and evaluated whether any
findings were indicative of fraud or non-compliance with
laws and regulations.
macro-economic environment, climate-related
developments and the relevant information of which
we are aware as a result of our audit, including,
among others, the cash flow projections
Performing inquiries of management as to their
knowledge of going concern risks beyond the period
of management’s assessment
•
Based on our risk assessment and audit procedures
performed, we did not identify indications of fraud that
resulted in material misstatements in the financial
statements.
Our procedures did not result in outcomes contrary to
management’s assumptions and judgments used in the
application of the going concern assumption.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in the
audit of the financial statements. We have communicated
the key audit matters to the Supervisory Board. The key
audit matters are not a comprehensive reflection of all
matters identified by our audit and that we discussed. In
this section, we describe the key audit matters and include
a summary of the audit procedures we performed on
those matters.
Audit approach going concern
As disclosed in Note 1 of the Consolidated financial
statements, management performed their assessment of
the Company’s ability to continue as a going concern for
at least 12 months from the date of preparation of the
financial statements and has not identified events or
conditions that may cast significant doubt on the
Company’s ability to continue as a going concern
(hereafter: going concern risk). Our procedures to evaluate
management’s going concern assessment included,
among others:
• Considering whether management’s going concern
assessment included relevant information of which we
were aware as a result of our audit and inquiring with
management regarding management’s most
important assumptions underlying its going concern
assessment
Analyzing the financial position per balance sheet date,
such as financial leverage and cash positions, in
relation to the financial position per prior year balance
sheet date to assess whether events or circumstances
exist that may lead to a going concern risk, and
liquidity management as disclosed in Note 26 of the
Consolidated financial statements
Evaluating management’s current budget, including
expected future cash flows in comparison with last
year, market developments, developments in the
•
•
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Key audit matter
Our audit work and observations
Ongoing transformation projects of the organization, systems, processes and
controls.
Over the past years, the Group executed a wide range of transformation projects, which
included centralization of finance activities in global business service hubs and simplification
of the IT environment, impacting the Group’s systems, processes and controls relevant for
financial reporting. These projects continued in 2023, with the goal to align to the Group’s
evolving operating model, focusing on end-to-end processes and to increase operational
efficiencies and effectiveness.
The Group’s overall approach to governance, risk management and internal controls, its
processes, outcomes, financial reporting and disclosures is subject to oversight by the Audit
Committee.
The Audit Committee considered the impact of changes to systems, processes and
controls, such as the IT landscape rationalization and the centralization of accounting
operations and related internal controls in (global) business service hubs.
We evaluated the impact of the transformation projects on systems, processes and controls
on our audit.
During our audit, we updated our understanding of the ongoing transformation projects
relevant to our audit. We held discussions with management, global process owners,
functional management and with the business service hubs management in order to
understand the status of the transition, understand the processes and controls in place to
address the changes in the internal controls and evaluate the maturity of the processes. In
order to obtain further evidence of the implementation of the controls in place, we also
performed walkthroughs on selected controls. Furthermore, throughout the year we
attended the Audit Committee meetings where their considerations of the internal controls
were observed. We used this information as part of our risk assessment procedures,
including the evaluation of potential risk of fraud or error, and for the determination of the
scope of our audit.
Inherently, transformation processes encompass changes in the organization, processes
and culture and as such contribute to the risk of management override of controls, which is
a presumed audit risk in our audit.
For new and changed IT systems and related ITGCs, we involved our IT audit specialists.
We obtained an understanding of the project governance and change validation approach
and we tested data migration and IT general controls. We used data analytics to identify
unexpected journal entries.
Given the possible pervasive impact this may have on our audit, we considered this a key
audit matter.
From the procedures performed, we did not have material findings with respect to the
balance sheet positions and results recorded and disclosed.
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Key audit matter
Our audit work and observations
Valuation of post-retirement benefit provisions.
Note 18
The post-retirement benefit provisions consist of defined benefit obligations (€9.51 billion)
more than offset by plan assets (€10.07 billion). The largest pension plans are the ICI
Pension Fund (ICIPF) and the Akzo Nobel (CPS) Pension Scheme in the UK, which together
account for 86% of the defined benefit obligation (DBO) and 90% of the plan assets.
With the assistance of our actuarial experts, we evaluated management’s actuarial
assumptions and the valuation methodologies applied, as well as the objectivity and
competence of the Group’s external pension experts used for the calculation of the post-
retirement benefit positions.
We consider the valuation of the largest post-retirement benefit provisions to be a key audit
matter because positions are significant to the Group and the assessment process is
complex and involves significant management judgment, which could be subject to
management bias. The actuarial assumptions used include demographic assumptions (rates
of employee turnover, disability, early retirement and mortality) and financial assumptions
(discount rate, future salary development, benefit increases/indexation and inflation). Pension
positions are also influenced by buy-in transactions. The Group’s disclosures are included in
Note 18 to the Consolidated financial statements. Technical expertise is required to
determine closing positions.
We have challenged management, primarily on their assumptions applied to which the post-
retirement benefit provisions are the most sensitive (discount rate, price inflation and life
expectancy) by performing independent testing over the assumptions and methodologies
used and comparing to the published actuarial tables, among others, with support of our
actuarial experts.
We paid particular attention to the discount rate as disclosed by the Group in Note 18, given
the significance.
We also tested the participant census data and the valuation of the plan assets through
independent price testing (e.g. by reconciling to independently published market prices). In
addition, we obtained third party confirmations on plan assets.
Furthermore, we tested the buy-in transaction as disclosed in Note 18 to the Consolidated
financial statements and we verified the appropriate accounting. We also assessed the
adequacy of the Group’s disclosure in that note.
Our procedures did not result in material findings with respect to the valuation and
disclosure of post-retirement benefit provisions at December 31, 2023.
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Key audit matter
Our audit work and observations
Valuation of deferred tax assets.
Note 8
The Group operates globally and is therefore subject to income taxes in various tax
jurisdictions. The assessment of the valuation of deferred tax assets in Germany, the
Netherlands and the UK, resulting from net operating losses, tax credits and temporary
differences, is significant to our audit as the positions are significant to the Group,
calculations are complex and involve high estimation uncertainty and judgmental
assumptions, which could be subject to management bias. The key assumptions include
long term projections, tax planning strategies and local fiscal regulations. The Group’s
disclosures concerning income taxes are included in Note 8 to the Consolidated financial
statements.
With respect to the valuation of deferred tax assets, we performed the following procedures
with the assistance of our tax specialists:
• We tested management’s assessment of the recoverability of the deferred tax assets,
by challenging their key assumptions. We specifically focused on the developments of
the budget compared to the actual results in light of the recent macro-economic
developments and forecast 2023. We also performed look-back testing by comparing
the development of last year’s budget and estimates to the actual results for the year
• We also assessed the applicable local fiscal regulations and developments, in particular
those related to changes in the statutory income tax rates and settlement rules, as well
as interest limitation rules, ability to execute tax planning strategies, and specific
requirements of settlement of withholding taxes in the Netherlands, since these are key
assumptions underlying the valuation of the deferred tax assets. We analyzed the tax
positions and evaluated the assumptions and methodologies used
• We have read relevant correspondence with local tax authorities
•
In addition, we assessed the adequacy of the Group’s disclosures on deferred tax
assets and assumptions used
Our procedures did not result in material findings with respect to the valuation of deferred
tax assets, recorded and related disclosures at December 31, 2023.
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Report on the other information
included in the annual report
Report on other legal and regulatory
requirements and ESEF
The annual report contains other information. This includes
all information in the annual report in addition to the
financial statements and our auditor’s report thereon.
Our appointment
Based on the procedures performed as set out below, we
conclude that the other information:
•
Is consistent with the financial statements and does
not contain material misstatements
• Contains all the information regarding the directors’
report and the other information that is required by
Part 9 of Book 2 and regarding the Remuneration
report required by the sections 2:135b and 2:145
subsection 2 of the Dutch Civil Code
We have read the other information. Based on our
knowledge and the understanding obtained in our audit of
the financial statements or otherwise, we have considered
whether the other information contains material
misstatements.
By performing our procedures, we comply with the
requirements of Part 9 of Book 2 and section 2:135b
subsection 7 of the Dutch Civil Code and the Dutch
Standard 720. The scope of such procedures was
substantially less than the scope of those procedures
performed in our audit of the financial statements.
The Board of Management is responsible for the
preparation of the other information, including the
Management report (as defined in Note 1 of the
Consolidated financial statements) and the other
information in accordance with Part 9 of Book 2 of the
Dutch Civil Code. The Board of Management and the
Supervisory Board are responsible for ensuring that the
Remuneration report is drawn up and published in
accordance with sections 2:135b and 2:145 subsection 2
of the Dutch Civil Code.
AkzoNobel Report 2023
We were appointed as auditors of Akzo Nobel N.V. on
April 29, 2014, by the Supervisory Board. This followed
the passing of a resolution by the shareholders at the
Annual General Meeting held on April 29, 2014, and
effective January 1, 2016. Our engagement has been
renewed annually.
•
European Single Electronic Format (ESEF)
Akzo Nobel N.V. has prepared the annual report in ESEF.
The requirements for this are set out in the Delegated
Regulation (EU) 2019/815 with regard to regulatory
technical standards on the specification of a single
electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report prepared in XHTML
format, including the marked-up financial statements as
included in the reporting package by Akzo Nobel N.V.,
complies, in all material respects with the RTS on ESEF.
The Board of Management is responsible for preparing the
annual report, including the financial statements in
accordance with the RTS on ESEF, whereby the Board of
Management combines the various components into a
single reporting package.
Our responsibility is to obtain reasonable assurance for our
opinion on whether the annual report in this reporting
package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch
law, including Dutch Standard 3950N "Assurance-
opdrachten inzake het voldoen aan de criteria voor het
opstellen van een digitaal
verantwoordingsdocument" (assurance engagements
relating to compliance with criteria for digital reporting).
Our examination included, among others:
• Obtaining an understanding of the Group’s financial
reporting process, including the preparation of the
reporting package
Identifying and assessing the risk that the annual
report does not comply in all material respects with the
RTS on ESEF and designing and performing further
assurance procedures responsive to those risks to
provide a basis for our opinion, including:
– Obtaining the reporting package and performing
validations to determine whether the reporting
package containing the Inline XBRL instance
document and the XBRL extension taxonomy files
have been prepared in accordance with the
technical specifications as included in the RTS on
ESEF
Examining the information related to the financial
statements in the reporting package to determine
whether all required mark-ups have been applied
and whether these are in accordance with the
RTS on ESEF
–
No prohibited non-audit services
To the best of our knowledge and belief, we have not
provided prohibited non-audit services as referred to in
article 5(1) of the European Regulation on specific
requirements regarding statutory audit of public-interest
entities.
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Services rendered
The Supervisory Board is responsible for overseeing the
Company’s financial reporting process.
The services, in addition to the audit, that we have
provided to the Company or its controlled entities, for the
period to which our statutory audit relates, are disclosed in
Note K to the financial statements.
Our responsibilities for the audit of the
financial statements
Responsibilities for the financial
statements and the audit
Responsibilities of the Board of
Management and the Supervisory Board for
the financial statements
The Board of Management is responsible for:
•
The preparation and fair presentation of the financial
statements in accordance with EU-IFRS and Part 9 of
Book 2 of the Dutch Civil Code
Such internal control as the Board of Management
determines is necessary to enable the preparation of
the financial statements that are free from material
misstatement, whether due to fraud or error
•
In preparing the financial statements, the Board of
Management is responsible for assessing the Company’s
ability to continue as a going concern. Based on the
financial reporting frameworks mentioned, the Board of
Management should prepare the financial statements
using the going-concern basis of accounting unless the
Board of Management either intends to liquidate the
Company or to cease operations, or has no realistic
alternative but to do so. The Board of Management should
disclose events and circumstances that may cast
significant doubt on the Company’s ability to continue as a
going concern in the financial statements.
AkzoNobel Report 2023
Our responsibility is to plan and perform an audit
engagement in a manner that allows us to obtain sufficient
and appropriate audit evidence to provide a basis for our
opinion. Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high but not absolute level of
assurance, and is not a guarantee that an audit conducted
in accordance with the Dutch Standards on Auditing will
always detect a material misstatement when it exists.
Misstatements may arise due to fraud or error. They are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
Materiality affects the nature, timing and extent of our audit
procedures and the evaluation of the effect of identified
misstatements on our opinion.
A more detailed description of our responsibilities is set out
in the appendix to our report.
Amsterdam, February 26, 2024
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
Appendix to our auditor’s report on the
financial statements 2023 of Akzo
Nobel N.V.
In addition to what is included in our auditor’s report, we
have further set out in this appendix our responsibilities for
the audit of the financial statements and explained what an
audit involves.
The auditor’s responsibilities for the audit
of the financial statements
We have exercised professional judgment and have
maintained professional skepticism throughout the audit in
accordance with Dutch Standards on Auditing, ethical
requirements and independence requirements. Our audit
consisted, among other procedures, of the following:
Identifying and assessing the risk of material
•
misstatement of the financial statements, whether due
to fraud or error, designing and performing audit
procedures responsive to those risks, and obtaining
audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the intentional override of
internal control
• Obtaining an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Group’s internal control
Evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the Board of
Management
•
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the Audit Committee in accordance with article 11 of the
EU Regulation on specific requirements regarding statutory
audit of public-interest entities. The information included in
this additional report is consistent with our audit opinion in
this auditor’s report.
We provide the Supervisory Board with a statement that
we have complied with relevant ethical requirements
regarding independence, and to communicate with them
all relationships and other matters that may reasonably be
thought to bear on our independence, and where
applicable, related actions taken to eliminate threats or
safeguards applied.
From the matters communicated with the Supervisory
Board, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that
a matter should not be communicated in our report
because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest
benefits of such communication.
• Concluding on the appropriateness of the Board of
Management’s use of the going-concern basis of
accounting, and based on the audit evidence
obtained, concluding whether a material uncertainty
exists related to events and/or conditions that may
cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor’s report to the related
disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained
up to the date of our auditor’s report and are made in
the context of our opinion on the financial statements
as a whole. However, future events or conditions may
cause the Company to cease to continue as a going
concern
Evaluating the overall presentation, structure and
content of the financial statements, including the
disclosures, and evaluating whether the financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation
•
Considering our ultimate responsibility for the opinion on
the Consolidated financial statements, we are responsible
for the direction, supervision and performance of the
group audit. In this context, we have determined the
nature and extent of the audit procedures for components
of the Group to ensure that we performed enough work to
be able to give an opinion on the financial statements as a
whole. Determining factors are the geographic structure of
the Group, the significance and/or risk profile of group
entities or activities, the accounting processes and
controls, and the industry in which the Group operates. On
this basis, we selected group entities for which an audit or
review of financial information or specific balances was
considered necessary.
We communicate with the Supervisory Board regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit. In this respect, we also issue an additional report to
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LIMITED ASSURANCE
REPORT OF THE
INDEPENDENT AUDITOR
To: The Board of Management and the Supervisory Board
of Akzo Nobel N.V.
Assurance report on the selected non-
financial performance indicators in the
Sustainability statements of the annual
report 2023
Our conclusion
Based on the procedures performed and evidence
obtained, nothing has come to our attention that causes
us to believe that the selected non-financial performance
indicators in the Sustainability statements of the annual
report 2023 of Akzo Nobel N.V. over 2023 are not
prepared, in all material respects, in accordance with the
Akzo Nobel N.V. Reporting Principles Sustainability
statements 2023.
What we have examined
The object of our assurance engagement concerns the
following selected non-financial performance indicators for
the year ended December 31, 2023, marked with the
symbol ‘Ñ’ in the Sustainability statements of the annual
report 2023 (hereafter: the Indicators) of Akzo Nobel N.V.
(hereafter: AkzoNobel or the Company), Amsterdam, the
Netherlands:
•
•
• Renewable energy (own operations) (%)
• Renewable electricity (own operations) (%)
Total energy use (1,000 TJ)
Total energy use (GJ per ton of production)
AkzoNobel Report 2023
• Greenhouse gas emissions - Direct CO2(e) emissions
•
(Scope 1) (kilotons)
• Greenhouse gas emissions - Direct CO2(e) emissions
(Scope 1) (kg per ton of production)
• Greenhouse gas emissions - Indirect CO2(e) emissions
(Scope 2) (kilotons)
• Greenhouse gas emissions - Indirect CO2(e) emissions
•
•
•
•
(Scope 2) (kg per ton of production)
Total greenhouse gas emissions - Scope 1 and Scope
2 combined CO2(e) emissions – Market based
(kilotons)
Total greenhouse gas emissions - Scope 1 and Scope
2 combined CO2(e) emissions – Market based (kg per
ton of production)
Volatile organic compounds (VOC) (kilotons)
Volatile organic compounds (VOC) (kg per ton of
production)
Total waste (kilotons)
Total waste (kg per ton of production)
Total reusable waste (kilotons)
Total reusable waste (kg per ton of production)
Total non-reusable waste (kilotons)
Total non-reusable waste (kg per ton of production)
•
•
• Circular use of materials (%)
•
•
•
•
• Hazardous waste total (kilotons)
• Hazardous waste total (kg per ton of production)
• Hazardous waste non-reusable (kilotons)
• Hazardous waste non-reusable (kg per ton of
Suppliers in sustainability program – in line with our
expectation (% against baseline)
Sustainable solutions (% of revenue)
•
• Cradle-to-grave carbon footprint (Scope 1, 2 and 3)
•
•
•
•
•
•
(million tons)
Scope 3 upstream selected categories (million tons)
Scope 3 downstream selected categories (million tons)
Scope 3 - upstream and downstream combined
(million tons)
Fatalities employees (number)
Total reportable injury rate employees/temporary
workers (per 200,000 hours)
Lost time injury rate employees/temporary workers
(per 200,000 hours)
• Occupational illness rate employees (per 200,000
•
•
hours)
Fatalities contractors (temporary workers plus
independent) (number)
Total reportable injury rate contractors (per 200,000
hours)
Lost time injury rate contractors (per 200,000 hours)
Life-changing injuries (number)
Loss of primary containment - Level 1 (number)
Loss of primary containment - Level 2 (number)
•
•
•
•
• Regulatory actions – Level 4 (number)
Security incidents Level 3 (number)
•
Female executives (%)
•
production)
• Hazardous waste to landfill (kilotons)
• Non-hazardous waste to landfill (kilotons)
•
•
•
•
Total waste to landfill (kilotons)
Total freshwater use (million m3)
Total freshwater use (m3 per ton of production)
Total freshwater consumption (excluding water related
to product) (million m3)
Total freshwater consumption (excluding water related
to product) (m3 per ton of production)
Suppliers participating in sustainability program (%
against baseline)
Suppliers in sustainability program – under
development (% against baseline)
•
•
•
Some Indicators have a different reporting period than the
calendar year 2023. When this is the case, it is indicated in
the annual report and in AkzoNobel’s Reporting Principles
Sustainability statements 2023.
The basis for our conclusion
We conducted our examination in accordance with Dutch
law, including the Dutch Standard 3000A “Assurance
engagements, other than audits or reviews of historical
financial information (attestation-engagements)”. This
engagement is aimed to provide limited assurance. Our
responsibilities under this standard are further described in
the section “Our responsibilities for the examination” of our
report.
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We believe that the assurance information we have
obtained is sufficient and appropriate to provide a basis for
our conclusion.
Consequently, the Indicators need to be read and
understood together with the reporting criteria used.
examination in accordance with the Dutch Standard
3000A, ethical requirements and independence
requirements.
Independence and quality control
We are independent of AkzoNobel in accordance with the
“Verordening inzake de onafhankelijkheid van accountants
bij assurance opdrachten” (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to
independence) and other relevant independence
requirements in the Netherlands. Furthermore, we have
complied with the “Verordening gedrags- en
beroepsregels accountants” (VGBA, Code of Ethics for
Professional Accountants, a regulation with respect to
rules of professional conduct).
PwC applies the “Nadere voorschriften
kwaliteitssystemen” (NVKS, Regulations for quality
systems) and accordingly maintains a comprehensive
system of quality control including documented policies
and procedures regarding compliance with ethical
requirements, professional standards and other applicable
legal and regulatory requirements.
Reporting criteria
The reporting criteria applied for the preparation of the
Indicators are the AkzoNobel Reporting Principles
Sustainability statements 2023, developed by the
Company, as disclosed in section “Basis for preparation”
of the annual report 2023 and further elaborated in the
document “Reporting Principles Sustainability statements
2023”, which was made available online1 at
www.akzonobel.com/en/about-us/sustainability-/
reporting-principles-.
The absence of an established practice on which to draw,
to evaluate and measure non-financial performance
indicators allows for different, but acceptable,
measurement techniques, and can affect comparability
between entities, and over time.
Responsibilities for the Indicators and
the examination thereof
Responsibilities of the Board of Management and
the Supervisory Board
The Board of Management of AkzoNobel is responsible for
the preparation of the Indicators in accordance with
AkzoNobel’s Reporting Principles Sustainability statements
2023, including the identification of the intended users and
the criteria being applicable for the purpose of these users.
Furthermore, the Board of Management is responsible for
such internal control as it determines is necessary to
enable the preparation of the Indicators that are free from
material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for overseeing the
Company’s reporting process on the Indicators.
Our responsibilities for the examination
Our responsibility is to plan and perform our examination in
a manner that allows us to obtain sufficient and
appropriate evidence to provide a basis for our conclusion.
Our conclusion aims to provide limited assurance. The
procedures performed in this context consisted primarily of
making inquiries with officers of the entity and determining
the plausibility of the Indicators included in the
Sustainability statements of the annual report 2023. The
level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that
would have been obtained had a reasonable assurance
engagement been performed.
Procedures performed
We have exercised professional judgement and have
maintained professional skepticism throughout the
•
•
Our examination consisted, among other things, of the
following:
•
Evaluating the appropriateness of the reporting criteria
used, their consistent application and related
disclosures to the Indicators. This includes the
evaluation of the reasonableness of estimates made
by the Board of Management
Through inquiries, obtaining an understanding of
internal control relevant to the examination in order to
design assurance procedures that are appropriate in
the circumstances, but not for the purpose of
expressing a conclusion on the effectiveness of the
Company’s internal control
Identifying areas of the Indicators where misleading or
unbalanced information or a material misstatement,
whether due to fraud or error, is likely to arise.
Designing and performing further assurance
procedures aimed at determining the plausibility of the
Indicators responsive to this risk analysis. These
procedures consisted, among others, of:
–
Interviewing management (and/or relevant staff) at
corporate level responsible for the sustainability
strategy, policy and results
Interviewing relevant staff responsible for providing
the information for, carrying out internal control
procedures on, and consolidating the data
resulting in the Indicators
–
– Determining the nature and extent of the
procedures for locations. For this, the nature,
extent and/or risk profile of these locations are
decisive. Based thereon we selected locations to
visit, being Vilafranca, Spain; Dongguan, China;
and Colón, Uruguay. Of these, one was a physical
visit and two were virtual. These visits are aimed
at, on a local level, observing parts of AkzoNobel’s
Health, Safety, Environment and Security (HSE&S)
audits, validating source data and obtaining
1 The maintenance and integrity of AkzoNobel’s website is the responsibility of the Board of Management; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the
Reporting Principles Sustainability statements 2023 when presented on AkzoNobel’s website after the date of this assurance report.
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186
OTHER INFORMATION
through inquiries a general understanding of the
control environment, processes and information
relevant to the preparation of the Indicators
– Obtaining assurance evidence that the Indicators
reconcile to underlying records of the Company
– Reviewing, on a limited test basis, relevant internal
and external documentation
– Considering the amount and trends of the
Indicators submitted for consolidation at corporate
level
• Considering the consistency of the Indicators with the
information in the annual report which is not included
in the scope of our review
• Considering whether the Indicators as a whole are
clearly and adequately disclosed in accordance with
the applicable reporting criteria
We communicated with the Supervisory Board and the
Board of Management regarding, among other matters,
the planned scope and timing of the review and significant
findings that we identified during our review.
Amsterdam, February 26, 2024
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
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FINANCIAL SUMMARY
Consolidated statement of income
in € millions, for the year ended December 31
Revenue
Operating income
Adjusted operating income1
Financing income and expenses
Income tax
Results from associates
Profit/(loss) for the period from continuing operations
Discontinued operations
Non-controlling interests
Net income, attributable to shareholders
Common shares, in millions at year-end
Dividend2
Number of employees at year-end
Average number of employees
Employee Benefits
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
Ratios
ROS%1
OPI margin%1
ROI%1
Net income in % of shareholders’ equity
Employee benefits in % of revenue
Interest coverage (operating income / net interest on net debt)
Per share information
Net income
Adjusted earnings per share
Shareholders’ equity
Highest share price during the year
Lowest share price during the year
Year-end share price
2014
2015
201634
2017
2018
20195
2020
2021
2022
2023
14,296
14,859
9,434
9,612
9,256
9,276
8,530
9,587
10,846
10,668
987
1,573
1,072
1,462
(156)
(252)
21
(114)
(416)
17
600
1,060
18
(72)
546
6
(87)
979
923
928
(91)
825
905
(78)
(234)
(253)
18
616
436
(82)
970
17
511
393
(72)
832
605
798
(52)
(118)
20
455
6,274
(55)
6,674
841
991
(76)
(230)
20
555
22
(38)
539
963
1,118
1,099
1,092
(69)
(241)
25
678
(7)
(41)
630
(39)
(246)
26
859
6
(36)
829
708
789
(124)
(214)
18
388
(10)
(26)
352
1,029
1,074
(272)
(296)
27
488
(5)
(41)
442
246.0
249.0
252.2
252.6
256.2
199.6
190.6
181.6
174.4
170.6
212
222
239
1,287
390
1,423
366
365
347
338
47,200
45,600
36,300
35,700
34,500
33,800
32,200
32,800
35,200
35,200
48,200
46,100
36,200
36,200
34,900
34,200
33,000
32,700
35,100
34,900
2,824
2,728
1,794
1,935
1,976
1,875
1,850
1,773
1,960
2,008
297
20
322
34
261
25
266
23
265
17
271
25
258
29
293
34
309
20
7.5
6.9
10.9
9.5
19.8
8.6
9.8
10.6
14.0
15.1
18.4
16.2
9.8
9.8
14.4
14.8
19.0
13.2
9.4
8.6
13.9
14.2
20.1
12.3
8.6
6.5
12.6
56.4
21.3
8.0
10.7
9.1
14.1
8.5
20.2
14.3
12.9
11.3
16.1
11.0
21.7
18.5
11.4
11.7
16.0
15.3
18.5
18.0
7.3
6.5
9.8
8.1
18.1
8.1
2.23
2.81
3.95
4.02
3.87
3.80
3.31
4.40
26.19
1.91
2.53
3.10
3.29
3.88
4.48
4.07
2.01
2.45
306
29
10.1
9.6
13.0
10.2
18.8
8.4
2.59
3.07
23.53
26.04
25.99
23.22
46.19
32.33
30.26
30.32
25.43
25.33
60.77
74.81
64.74
82.64
82.70
91.86
91.60
107.80
47.63
55.65
50.17
59.11
68.82
69.12
48.50
83.50
57.65
61.68
59.39
73.02
70.40
90.69
87.86
96.50
98.50
56.22
62.56
78.82
61.42
74.82
1 Refer to the glossary for definitions.
2 Cash dividend paid to shareholders of AkzoNobel.
3 Re-presented to present the Specialty Chemicals business as discontinued operations.
4 Re-presented to the new adjusted earnings per share definition, which no longer excludes post-tax amortization charges.
5 Includes the impact of the adoption of IFRS 16 “Leases”.
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FINANCIAL SUMMARY
Consolidated balance sheet
In € millions at December 31
Intangible assets
Property plant and equipment
Right-of-use assets
Other non-current assets
Total non-current assets
Inventories
Trade and other receivables
Current tax assets
Short-term investments
Cash and cash equivalents
Assets held for sale
Total current assets
Shareholders’ equity
Non-controlling interests
Total equity
Provisions
Long-term borrowings
Other non-current liabilities
Total non-current liabilities
Short-term borrowings
Trade and other payables
Current tax liabilities
Current portion of provisions
Liabilities held for sale
Total current liabilities
Average Invested capital3
Capital expenditures4
Depreciation
Operating Working Capital56
Net debt
Ratios
Equity/non-current assets
Inventories and receivables/other current liabilities
Operating working capital as % of revenue6
1 2016 is re-presented to present the Specialty Chemicals business as discontinued operations.
2 Includes the impact of the adoption of IFRS 16 “Leases”.
3 Refer to glossary for definition.
4 Capital expenditures include investments in intangible assets as from 2018.
AkzoNobel Report 2023
2014
2015
20161
2017
2018
20192
2020
2021
2022
4,142
4,156
4,413
3,409
3,458
3,625
3,554
3,690
4,072
3,835
4,003
4,190
1,832
1,748
1,700
1,621
1,800
1,968
—
—
—
—
—
374
324
304
291
2,148
2,125
1,736
1,894
1,965
2,541
2,614
2,736
2,166
10,125
10,284
10,339
7,135
7,171
8,240
8,113
8,530
8,497
1,545
1,504
1,532
1,094
1,139
1,139
1,159
1,650
1,843
2,743
2,741
2,787
1,964
2,141
2,133
1,994
2,339
2,447
88
—
69
—
59
—
62
—
74
5,460
63
138
55
250
149
58
168
336
2023
4,081
1,994
302
2,137
8,514
1,649
2,483
134
265
1,732
1,365
1,479
1,322
2,799
1,271
1,606
1,152
1,450
1,513
66
—
—
4,601
—
—
—
—
—
6,174
5,679
5,857
9,043
11,613
4,744
5,064
5,348
6,244
5,790
6,484
6,553
5,865
11,834
6,350
5,746
5,425
4,333
477
496
481
442
204
218
204
211
215
—
6,044
4,322
224
6,267
6,980
7,034
6,307
12,038
6,568
5,950
5,636
4,548
4,546
2,143
1,865
1,938
964
899
981
896
812
554
584
2,527
2,161
2,644
2,300
1,799
2,042
2,771
1,994
3,332
3,165
412
360
367
285
368
391
467
567
561
5,082
4,386
4,949
3,549
3,066
3,414
4,134
3,373
4,447
811
430
87
973
599
169
119
1,556
2,543
3,407
3,473
3,475
2,794
2,645
2,406
2,580
2,948
2,801
227
494
11
243
451
—
229
422
118
241
—
2,196
225
211
—
196
231
—
162
232
—
216
149
—
236
166
—
557
4,306
2,398
2,933
211
164
—
4,950
4,597
4,213
6,322
3,680
3,002
3,093
4,869
5,746
5,706
9,871
10,475
6,422
6,494
6,340
7,026
6,834
6,829
8,062
8,233
588
477
651
487
634
206
1,418
1,385
1,405
613
202
927
184
181
898
214
293
1,068
258
297
878
288
281
292
281
1,247
1,760
1,606
1,226
1,252
1,951
(5,861)
802
1,034
2,340
4,089
0.62
1.20
10.1
0.68
1.16
9.7
0.68
1.18
10.2
0.88
1.07
10.2
1.68
1.17
9.7
0.80
1.28
11.9
0.73
1.17
9.9
0.66
1.31
13.0
0.54
1.47
0.2
286
277
1,524
3,785
0.53
1.36
15.1
5 As from 2018 trade payables include certain other payables, which were previously classified as Other working capital.Trade payables, Operating working capital and
Other working capital items have been re-presented for this change of definition for some €240 million.
6 Operating working capital is measured against four times fourth quarter revenue.
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FINANCIAL SUMMARY
Segment statistics
in € millions, for the year ended December 31
Decorative Paints
Revenue1
Operating income
Adjusted operating income
ROS%
OPI margin%
Average invested capital
ROI%
Capital expenditures
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
Performance Coatings
Revenue1
Operating income
Adjusted operating income
ROS%
OPI margin%
Average invested capital
ROI%
Capital expenditures
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
2014
2015
2016
2017
2018
20191,2
2020
20213
20224
2023
3,909
4,007
3,835
3,898
3,699
3,670
3,558
3,979
4,344
4,300
248
248
6.3
6.3
345
345
8.6
8.6
366
357
9.3
9.5
334
351
9.0
8.6
308
346
9.4
8.3
425
418
11.4
11.6
551
573
16.1
15.5
622
580
14.6
15.6
388
393
9.0
8.9
500
500
11.6
11.6
2,824
2,959
2,783
2,803
2,798
3,106
2,799
2,872
3,677
3,755
8.8
143
11.7
158
12.8
107
12.5
112
12.4
50
13.4
62
20.5
77
20.2
108
10.7
91
13.3
99
15,500
15,100
14,800
14,700
14,100
12,900
12,100
12,500
13,800
14,200
252
16
265
23
259
25
265
23
262
22
284
33
294
46
318
50
315
28
303
35
5,589
5,955
5,665
5,775
5,587
5,549
4,957
5,603
6,499
6,368
545
545
9.8
9.8
792
792
13.3
13.3
735
759
13.4
13.0
668
669
11.6
11.6
577
629
11.3
10.3
565
688
12.4
10.2
665
700
14.1
13.4
616
614
11.0
11.0
448
497
7.6
6.9
698
685
10.8
11.0
2,480
2,692
2,586
2,860
3,066
3,325
3,388
3,520
3,895
3,725
22.0
143
29.4
147
29.4
159
23.4
129
20.5
107
20.7
113
20.7
146
17.4
147
12.8
167
18.4
165
21,000
19,700
19,300
19,800
19,200
18,000
17,500
17,000
18,000
17,400
266
26
302
40
294
38
292
34
291
30
308
31
283
38
330
36
361
25
366
40
1 The 2019 figures are restated to represent revenue from third parties instead of group revenue.
2 Includes the impact of the adoption of IFRS 16 “Leases”.
3 Operating income and adjusted operating income (and related measures) per segment for 2021 have been updated to reflect changes in the financial reporting structure related to a narrower definition of corporate activities and corporate costs in corporate and other
activities.
4 Revenue, operating income, adjusted operating income, average invested capital (and related measures) for 2022 have been updated to reflect changes in the financial reporting structure.
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FINANCIAL SUMMARY
Regional statistics
In € millions
Revenue by destination
Revenue by origin
Capital expenditures
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
The Netherlands
North America
China
63
778
15
609
Average invested capital
1,622
1,713
1,701
2,038
2,013
707
689
784
899
359
484
42
342
434
46
335
445
45
319
409
45
315
409
34
1,246
1,114
1,163
1,416
1,379
1,268
1,205
1,418
1,396
1,400
1,278
1,126
1,194
1,445
1,403
1,271
1,198
1,389
1,387
1,392
32
43
37
42
29
817
15
24
30
32
908
852
876
878
36
887
Number of employees at year-end
2,400
2,300
2,400
2,300
2,300
3,100
3,000
3,100
3,100
3,100
4,900
4,500
4,400
4,300
4,600
UK
Latin America
Other Asian countries and Pacific
Revenue by destination
Revenue by origin
Capital expenditures
838
951
16
838
882
900
1,013
975
1,034
1,092
1,097
15
26
24
709
674
11
601
588
11
744
1,298
1,278
1,548
1,282
1,454
1,703
1,624
724
1,282
1,262
1,525
1,215
1,416
1,647
1,569
15
16
22
32
44
61
62
Average invested capital
850
623
553
503
350
290
315
823
1,070
773
768
684
834
Number of employees at year-end
3,200
3,000
3,000
3,000
3,000
2,400
2,300
2,400
5,100
5,200
6,800
6,100
6,200
6,300
6,300
Revenue by destination
3,308
3,147
3,591
3,814
3,659
Revenue by origin
Capital expenditures
3,093
2,994
3,385
3,584
3,536
66
75
74
71
87
Average invested capital
1,816
1,899
1,916
2,087
2,059
Number of employees at year-end
11,000 11,000 11,300 11,100 10,700
Other EMEA countries
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191
GLOSSARY
AGM or EGM
Annual General Meeting of shareholders; Extraordinary
General Meeting of shareholders.
than those changes resulting from transactions with
shareholders in their capacity as shareholders.
Huarun business
The acquired Chinese decorative paints business of
Sherwin-Williams.
Alternative Performance Measures (APMs)
Performance measures which are not defined by IFRS and
which exclude the so-called Identified items. Alternative
Performance Measures include, but are not limited to,
adjusted operating income, (adjusted) EBITDA, adjusted
earnings per share, ROS and ROI.
BBS
Behavior-based safety. A global program run at all
AkzoNobel locations.
Business Partner Code of Conduct
Explains what we stand for as a company, what we value
and how we run our business. It brings our core values of
safety, integrity and sustainability to life and shows what
they mean in practice.
Capital expenditures
Capital expenditures is the total of investments in property,
plant and equipment and investments in intangible assets.
Carbon footprint
The total amount of greenhouse gas (GHG) emissions
caused during a defined period of a product’s lifecycle. It
is expressed in terms of the amount of carbon dioxide
equivalents CO2(e) emitted. Greenhouse gases include
CO2, CO, CH4, N2O and HFCs, which have a global
warming impact. We also include the impact of VOCs in
our targets.
Code of Conduct
Defines our core values and how we work; incorporates
fundamental principles on issues such as business
integrity, labor relations, human rights, health, safety,
environment and security and community involvement.
Comprehensive income
Comprehensive income is the change in equity during a
period resulting from transactions and other events, other
AkzoNobel Report 2023
Constant currencies
Constant currencies calculations exclude the impact of
changes in foreign exchange rates by retranslating the
prior year local currency amounts into euros at the current
year's foreign exchange rates.
CSRD
Corporate Sustainability Reporting Directive.
(Adjusted) earnings per share
Earnings per share are net income attributable to
shareholders divided by the weighted average number of
common shares outstanding during the year.
Adjusted earnings per share are the basic earnings per
share, excluding identified items and taxes thereon.
(Adjusted) EBITDA
EBITDA is operating income excluding depreciation and
amortization.
HSE&S
Health, safety, environment and security.
Identified items
Identified items are special charges and benefits, results
on acquisitions and divestments, major restructuring and
impairment charges and charges related to major legal,
environmental and tax cases.
(Average) invested capital
Invested capital is total assets (excluding cash and cash
equivalents, short-term investments, investments in
associates, the receivables from pension funds in an asset
position, and assets held for sale) less current income tax
payable, deferred tax liabilities and trade and other
payables.
Average invested capital is the average of the monthly
invested capital balances for the last 12 months.
Adjusted EBITDA is operating income excluding
depreciation, amortization and identified items.
Latin America
Excludes Mexico.
EMEA
Europe, Middle East and Africa.
Emissions and waste
We report emissions to air, land and water for those
substances that may have an impact on people or the
environment: CO2, NOx and SOx, VOCs, hazardous and
non-hazardous waste. Definitions are in the Sustainability
statements.
ESG
Environmental, social and governance.
Leverage ratio
Leverage ratio is net debt divided by EBITDA; calculated
as the total of the last 12 months.
Lost time injury rate (LTIR)
The number of lost time injuries per 200,000 hours
worked. Full definitions are in the Sustainability statements.
Net debt
Net debt is defined as long-term borrowings plus short-
term borrowings less cash, cash equivalents and short-
term investments.
North America
Includes Mexico.
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GLOSSARY
North Asia
Includes, among others, China, Japan and South Korea.
(Adjusted) operating income
Operating income is defined in accordance with IFRS and
includes identified items (to the extent these relate to
operating income). Adjusted operating income excludes
identified items.
Free cash flow
Free cash flow is net generated cash from/(used for)
operating activities, minus capital expenditures.
OPI margin
Operating income as a percentage of revenue.
R&D
Research and development.
Relevant markets
Segments and regions of the paints and coatings industry
from which AkzoNobel generates revenue.
ROI (return on investment)
ROI is adjusted operating income of the last 12 months as
a percentage of average invested capital.
ROS (return on sales)
ROS is adjusted operating income as a percentage of
revenue.
Shareholders’ equity per share
Akzo Nobel N.V. shareholders’ equity divided by the
number of common shares outstanding at year-end.
South Asia Pacific
Includes South East Asia and Asia Pacific.
SSPs
Shared Socio-economic Pathways are scenarios that help
model future changes, including climate change.
AkzoNobel Report 2023
Total reportable rate of injuries (TRR)
The number of injuries per 200,000 hours worked. Full
definitions are in the Sustainability statements.
Reporting principles Sustainability
statements
TSR (total shareholder return)
Compares the performance of different companies’ stocks
and shares over time. Combines share price appreciation
and dividends paid to show the total return to
shareholders. The relative TSR position reflects the market
perception of overall performance relative to a reference
group.
VOC
Volatile organic compounds.
Our reporting principles describe in detail the definitions,
methods and major assumptions for all sustainability
metrics reported in our annual report and on our website.
The full version is available on our website via https://www.
akzonobel.com/en/about-us/sustainability-/reporting-
principles
Environmental
Energy use
The energy use of AkzoNobel in absolute measures (1,000
TJ) and per ton of production. Energy is expressed as
“primary” energy, or fuel equivalents, used on our sites and
to generate electricity/heat for our sites. Production is
output from each designated production unit (external and
internal sales). Energy use is also expressed on a regional
basis as % of total energy use.
Percentage renewable energy
Percentage renewable energy used in our operations.
Renewable energy (in fuel equivalent) is the sum of energy
used from renewable electricity, biomass, renewable
steam and hot water. Energy is expressed as “primary”
energy, or fuel equivalents. Expressed as the share of
renewable energy AkzoNobel uses in its own operations
relative to the total energy used. We use an average
efficiency factor of 40%.
Percentage renewable electricity
Percentage renewable electricity used in our operations.
Renewable electricity is electricity that is generated from
inexhaustible resources, such as wind, solar, hydro,
biomass and tidal. Expressed as the share of total
renewable electricity (own generated plus imported from
grid) AkzoNobel uses in its own operations relative to the
total electricity used.
Strategy | Sustainability | Leadership and governance | Financial information
193
GLOSSARY
Greenhouse gas emissions – Scope 1 (direct) and
Scope 2 (Indirect)
The total greenhouse gas emissions from processes and
combustion at our facilities and indirect emissions from
purchased energy in absolute measures (Mt CO2e) and kg
CO2e per ton of production. Emissions from transport in
own operations is very limited and therefore not material
compared to other Scope 1 and 2 emissions. As transport
is not material to Scope 1 and 2, these scopes exclude
transport. We measure and report CO2 in line with the
GHG Protocol. The other gases from the GHG Protocol
are considered immaterial and not actively measured. For
Scope 2 we make a distinction between market based
and location based, the latter as from 2023.
Volatile organic compounds
Volatile organic compound emissions in absolute
measures (kilotons) and kg per ton production. Volatile
organic compounds (VOCs) are emitted as gases from
certain solids or liquids, for instance from solvent-based
paints.
Total waste
Total waste in absolute measures (kilotons) and kg per ton
production. Waste is reported as total weight, not dry
weight. Waste is any material arising from our routine
operations which is not incorporated into final products
and not directly released to atmosphere or direct to
surface water.
Circular use of materials
The amount of materials reused by AkzoNobel and third
parties (reusable waste plus by-products) divided by the
total waste plus by-products (percentage).
Hazardous waste
Hazardous waste is waste that is classified and regulated
as such according to the national, state, provincial or local
legislation in place. Locations in countries where no
appropriate legislation exists should consult their regional
HSE&S manager for advice on hazardous waste
classification of the different types of wastes generated.
AkzoNobel Report 2023
Total waste to landfill
All hazardous and non-hazardous non reusable waste (in
absolute measures (kilotons) and kg per ton production) as
it leaves our premises in the reporting period, sent for
disposal to landfill.
Total fresh water use and consumption
Fresh water use as absolute measure (million m3) and m3
per ton production.
Extraction recorded as surface, ground and potable water
Use recorded as cooling, process and other use (e.g.
hygiene, grounds)
The majority of water is used for cooling and returned to
the original source, slightly heated. Fresh water
consumption as absolute measure (million m3) and m3 per
ton production. Freshwater consumption is the fresh water
use minus cooling water and water in product. Cooling
water is excluded as it is extracted and returned from the
same basin only with a potentially altered temperature
(chemically unchanged).
Suppliers signed Business Partner Code of Conduct
(% of spend)
Percentage product related (PR) spend (measured in euro
value) with suppliers (raw materials and packaging) who
have signed our business partner Code of Conduct.
Percentage non-product related (NPR) spend (measured
in euro value) with suppliers who have signed our Business
Partner Code of Conduct. Our Business Partner Code of
Conduct states that we want to do business with business
partners who endorse our ethical values and our social
and environmental standards. We therefore require
suppliers to sign our Business Partner Code of Conduct,
which is based on the AkzoNobel Code of Conduct.
Suppliers sustainability risk analysis (baseline)
Number of suppliers who have been identified as risk to
AkzoNobel due to their spend level (>€250,000), country
risk (sensitive and emerging countries using EcoVadis’
country risk profile) and/or category risk. Spend levels are
based on the prior reporting year, which means for the
2023 annual report, 2022 spend levels were used.
Suppliers participating in sustainability program
Number of suppliers who performed an EcoVadis online
assessment or TfS onsite audit (in % of baseline as
indicated under “Sustainability risk analysis”).
Suppliers in sustainability program – in line with
expectations
Number of suppliers who meet our expectation in the
EcoVadis assessment (in % of baseline as indicated under
“Sustainability risk analysis”): 45 total score and human
right and labor score of 50.
Suppliers in sustainability program – under
development
Suppliers who have performed the EcoVadis assessment
but who are not yet meeting our expectation. Suppliers
have 3 years to reach the minimum EcoVadis scores (see
“Suppliers in line with our expectation”).
Sustainable solutions
A measure of the sustainability of our products, which
have customer/consumer sustainability benefits, as
percentage of our revenue. For 2023 and 2022, the
reporting period for sustainable solutions is equal to the
calendar year. A sustainable solution is a product or
solution that has a sustainability benefit in one or more of
the following sustainability criteria, when compared to
other products or solutions which provide a similar
functional effect/benefit to the user: reduced carbon and
energy, health and well-being, less waste, reduced/reused
and renewed material use and longer-lasting performance.
A sustainable solution does not have any adverse effects
in any of these sustainability criteria throughout the value
chain.
Cradle-to-grave carbon footprint (Scope 1, 2 and 3)
Our CO2(e) footprint in million tons of CO2(e) including
Scope 1 (own operations), Scope 2 (energy use) and
Scope 3 (upstream) and Scope 3 (downstream). The
Strategy | Sustainability | Leadership and governance | Financial information
194
GLOSSARY
footprint includes the six main greenhouse gases defined
in the Greenhouse Gas Protocol.
Upstream: category 1 – purchased goods and services.
Downstream: category 10 – processing of sold products,
category 11 – use of sold products, category 12 – end-of-
life treatment of sold products.
members of the board of management and the
supervisory board of each of Akzo Nobel Nederland B.V.,
Akzo Nobel Decorative Coatings B.V., Akzo Nobel Car
Refinishes B.V. and International Paint (Nederland) B.V.
The company’s executives are considered as AkzoNobel’s
sub top as referred to in the Dutch Gender Diversity Bill
implemented in 2022.
The climate change impact of VOC emissions is included
in the cradle-to-grave footprint, due to the impact VOC
emissions have within the paints and coatings industry.
Social
Overall employee engagement index and Employee
Net Promoter score (eNPS)
Work engagement is defined as the employee’s approach
to their workplace. It’s the level of commitment to the
organization’s goals and values, and the motivation to
contribute to organizational success with an enhanced
sense of well-being.
eNPS stands for Employee Net Promoter Score. It is a
universal way of measuring employee satisfaction and
engagement. eNPS is measured with one question; “How
likely is it that you would recommend your employer to a
friend or acquaintance?” It is the only question in the
survey for which the answer options range from 0 to 10
and not 1 to 5. (10 indicating “Extremely likely” and 0
indicating “Not at all likely”). The purpose of eNPS is to get
a quick overview of the employees’ satisfaction.
The eNPS is calculated: eNPS = % Promoters - %
Detractors.
Female executives
Percentage of women at executive level. Executive level
includes all employees with an executive position grade at
AkzoNobel and its subsidiaries, including the members of
the Executive Committee who are not members of the
Board of Management. Executive level further includes the
AkzoNobel Report 2023
Total reportable injury rate (TRR)
The total reportable injury rate (TRR) is the number of
injuries resulting in a medical treatment case, restricted
work case, lost time case or fatality, per 200,000 hours
worked. Temporary workers are reported with employees,
since day-to-day management is by AkzoNobel. The
classifications of injuries are in line with OSHA guidelines.
Lost time injury rate employees/temporary workers
The lost time injury rate (LTIR) is the number of injuries
resulting in a lost time case per 200,000 hours worked.
Temporary workers are reported together with employees
since day-to-day management is by AkzoNobel.
Life-changing injuries
Life-changing injuries are injuries to employees, temporary
workers and contractors that are considered life-changing.
This includes (but is not limited to): coma, some level of
permanent disability (including loss of sight or hearing),
organ removal, the requirement for ongoing multiple
surgeries, lingering trauma, any amputation of digits or
limbs, skin grafts and the insertion of plates, pins or
screws. This category also includes fatalities.
Occupational illness rate employees
The total number of reportable occupational illness cases
for the reporting period per 200,000 hours worked. This
parameter is reportable for employees. Occupational
illness is defined as any abnormal condition or disorder
other than one resulting directly from an accident caused
by, or mainly caused by, work-related factors over a
period of time rather than an instantaneous event and
recognized during the reporting year as part of national
schemes or regulations. Occupational illness rate
employees includes illness related to mental health caused
by work conditions.
Loss of primary containment – Level 1 and 2
A loss of primary containment is an unplanned release of
material, product, raw material or energy to the
environment (including those resulting from human error).
Loss of primary containment incidents are divided into
three categories, dependent on severity, from small, on-
site spill/near misses up to Level 1 – a significant escape.
Refer to the full reporting principles on our website for
further details.
Regulatory actions Level 4
Formal legal notification with fines above €100,000
(Level 4).
Security incident Level 3
“Serious incident” is an incident which has the clear
potential to meet or meets incident criteria Level 1, 2 or 3.
Refer to the full reporting principles on our website for
further details.
AkzoNobel Cares (number of projects and number of
people empowered)
Social impact programs effort; consists of four programs:
“Let’s Colour”, SOS Children’s Villages, Education Fund
and local AkzoNobel CSR projects (e.g. CSR in India and
Pintuco Foundation in Colombia). Reported are: Number
of local community members empowered with new skills
and number of projects. AkzoNobel Cares projects are
defined as a separate activity benefiting people in
communities, involving AkzoNobel employees or funding,
reported to the central AkzoNobel Cares team quarterly.
The local community members empowered with new skills
are people with vulnerable backgrounds, including young
people at risk, who are trained in painting, professional
and life/soft skills as a result of project/activity/participation
delivered by AkzoNobel employees or through financial
donations.
Strategy | Sustainability | Leadership and governance | Financial information
195
APPENDIX
List of affiliated legal entities and corporations
List at December 31, 2023, of affiliated legal entities and
corporations in conformity with articles 379 and 414, Book
2 of the Dutch Civil Code belonging to Akzo Nobel N.V.,
Amsterdam
China
Akzo Nobel (China) Investment Co., Ltd.
Shanghai
Akzo Nobel Car Refinishes (Suzhou) Co,
Ltd.
Suzhou
Akzo Nobel Chang Cheng Coatings
(Guangdong) Co., Ltd.
Shenzhen
List of consolidated legal entities and corporations
Akzo Nobel Coatings (Dongguan) Co., Ltd. Dongguan
Owner-
ship %1
Akzo Nobel Coatings (Jiaxing) Co., Ltd.
Jiashan
Akzo Nobel Coatings (Tianjin) Co., Ltd.
Tianjin
Argentina
Akzo Nobel Argentina S.A.
Buenos Aires
100
Aruba
Arubaanse Verffabriek N.V.
Oranjestad
50.394
Australia
Akzo Nobel Coatings (Holdings) Pty
Limited
Akzo Nobel Pty Limited
Austria
Sunshine
Sunshine
Akzo Nobel Coatings GmbH
Salzburg
Akzo Nobel Holding Österreich GmbH
Vienna
Belgium
Akzo Nobel Paints Belgium NV
Auto Body Services CV (ABS)
Cleming BV
International Paint (Belgium) NV
Bolivia
Pinturas Coral De Bolívia Ltda
Botswana
Vilvoorde
Vilvoorde
Vilvoorde
Vilvoorde
Santa Cruz de
la Sierra
Dulux (Botswana) (Pty) Limited
Gaborone
Brazil
Akzo Nobel Ltda
Canada
Akzo Nobel Coatings Ltd
Akzo Nobel Wood Coatings Ltd
Cayman Islands
São Paulo
Ontario
Port Hope
Ichem Reinsurance Company Limited
George Town
ICI International Investments
George Town
Chile
International Paint (Akzo Nobel Chile) Ltda
Santiago
100
100
100
100
100
84.615
100
100
100
100
100
100
100
100
100
100
AkzoNobel Report 2023
Akzo Nobel Decorative Coatings (China)
Ltd.
Guangzhou
Akzo Nobel Decorative Coatings
(Langfang) Co., Ltd.
Akzo Nobel International Paint (Suzhou)
Co., Ltd.
Langfang
Suzhou
Akzo Nobel Paints (Chengdu) Limited
Chengdu
Akzo Nobel Paints (Guangzhou) Limited
Guangzhou
Akzo Nobel Paints (Shanghai) Limited
Shanghai
Akzo Nobel Performance Coatings
(Changzhou) Co., Ltd.
Akzo Nobel Performance Coatings
(Shanghai) Co., Ltd.
Akzo Nobel Powder Coatings (Chengdu)
Co., Ltd.
Akzo Nobel Powder Coatings (Langfang)
Co., Ltd.
Changzhou
Shanghai
Chengdu
Langfang
Akzo Nobel Powder Coatings (Wuhan) Co.,
Ltd.
Wuhan
International Paint of Shanghai Company
Limited
Shanghai
Valspar Coatings (Guangdong) Co., Ltd.
Guangdong
Colombia
AkzoNobel Colombia S.A.S.
Anhidridos y Derivados de Colombia
S.A.S.
Cacharreria Mundial S.A.S.
Compania Global de Pinturas S.A.S.
Interquim S.A.S.
Oceanic Paints S.A.S.
Costa Rica
Medellin
Medellin
Medellin
Medellin
Medellin
Medellin
Pintuco Costa Rica PCR, S.A.
Cartago
Curacao
Macomoca B.V.
Pintuco Curacao B.V.
Willemstad
Willemstad
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
51
100
100
100
100
100
100
60
100
100
100
Czech Republic
Akzo Nobel Coatings CZ, a.s.
Prague
Denmark
Akzo Nobel Deco A/S
International Farvefabrik A/S
Ecuador
Interquimec S.A.
Pinturas Ecuatorianas S.A.
Poliquim, Polimeros y Quimicos C.A.
Egypt
Akzo Nobel Egypt LLC
Copenhagen
Herlev
Quito
Guayaquil
Guayaquil
6th of
October City
Akzo Nobel Powder Coatings S.A.E.
Giza
El Salvador
100
100
100
100
100
100
100
100
Pintuco el Salvador S.A. de C.V.
San Salvador
100
Estonia
Akzo Nobel Baltics AS
Tallinn
Eswatini
Dulux Swaziland (Pty) Limited
Matsapha
Finland
Oy International Paint (Finland) Ab
Helsinki
France
Akzo Nobel Decorative Paints France S.A.
Thiverny
Akzo Nobel Distribution SAS
Akzo Nobel SAS
Mapaero SAS
SAS BOUCHER
Germany
Akzo Nobel Coatings GmbH
Akzo Nobel Deco GmbH
Akzo Nobel GmbH
Akzo Nobel Hilden GmbH
Corbas
Montataire
Pamiers
Pamiers
Stuttgart
Wunstorf
Cologne
Hilden
Akzo Nobel Powder Coatings GmbH
Reutlingen
International Farbenwerke GmbH
Börnsen
Schramm Coatings GmbH
Schramm Holding GmbH
Offenbach am
Main
Offenbach am
Main
100
100
100
99.983
99.983
100
100
100
100
100
100
100
100
100
100
100
Strategy | Sustainability | Leadership and governance | Financial information
196
APPENDIX
Greece
Akzo Nobel Anonymous Company of
Paints and Related Products
Varnishes and Paints Industry Vivechrom
Dr. Stefanos D. Pateras S.A.
Guatemala
Pintuco Guatemala S.A.
Guatemala
100
Guernsey
Impkemix Trustee Limited
St. Peter Port
100
Honduras
Pintuco de Honduras, S.A.
Choloma
Hong Kong SAR2
Akzo Nobel Chang Cheng Limited
Akzo Nobel HK (Holdings) Limited
Akzo Nobel Huarun Paints (HK) Holding
Limited
Hong Kong
Hong Kong
Hong Kong
International Paint (East Russia) Limited
Hong Kong
International Paint (Hong Kong) Limited
Hong Kong
Hungary
Akzo Nobel Coatings Zrt
Budapest
India
100
100
100
100
51
100
100
Akzo Nobel Global Business Services LLP
Pune
Akzo Nobel India Limited
Kolkata
ICI India Research & Technology Centre
Mumbai
100
74.757
18.689
Indonesia
PT Akzo Nobel Car Refinishes Indonesia
Jakarta
PT Akzo Nobel Wood Finishes and
Adhesives Indonesia
PT ICI Paints Indonesia
PT International Paint Indonesia
Ireland
Akzo Nobel (CR9) Limited
Jakarta
Jakarta
Jakarta
Dublin
Akzo Nobel Car Refinishes (Ireland) Limited Dublin
Dulux Paints Ireland Limited3
ICI Fertilisers (Ireland) Limited
ICI Ireland Limited
Italy
Akzo Nobel Coatings S.P.A.
Japan
Akzo Nobel Coatings K.K.
AkzoNobel Report 2023
Cork
Cork
Cork
Como
Tokyo
100
100
55
100
100
100
100
100
100
100
100
Athens
100
Akzo Nobel Kenya Limited
Nairobi
100
ICI Theta B.V.
Kenya
*ICI Omicron B.V.
Rotterdam
Rotterdam
Mandra Attica
79.184
Kuwait
International Warba Coatings Paint Mfg
Co. W.L.L.
Kuwait
49
*Panter B.V.
Hoofddorp
*International Paint (Nederland) B.V.
Rhoon
Latvia
Akzo Nobel Baltics SIA
Lithuania
Akzo Nobel Baltics, UAB
Malaysia
Riga
Vilnius
100
100
Akzo Nobel Industrial Coatings Sdn Bhd
Kuala Lumpur
100
Akzo Nobel Paints (Malaysia) Sdn Bhd
Kuala Lumpur
59.949
Akzo Nobel Paints Marketing Sdn Bhd
Colourland Paints Sdn Bhd
International Paint Sdn Bhd
Selangor
Selangor
Johor Darul
Takzim
Mauritius
Akzo Nobel (Mauritius) Limited
Les Pailles
Mexico
Akzo Nobel Performance Coatings S.A. de
C.V.
Mexico City
Morocco
59.949
59.949
70
100
100
New Zealand
Akzo Nobel Coatings Ltd
Avondale
Nicaragua
Industrial Pintuco Nicaragua S.A.
Managua
99.910
Norway
Akzo Nobel Coatings AS
Oslo
Oman
Akzo Nobel Oman SAOC
Muscat
Pakistan
100
50
Akzo Nobel Pakistan Limited
Karachi
98.198
Panama
Centro de Pinturas Pintuco, S.A.
International Paint (Panama) Inc.
Panama
Mercantil
100
100
Kativo Chemical Industries, S.A.
Panama City
99.965
Kativo Holding Co., S.A.
KCI Export Trading Ltd
Pinturas Mundial de Panama, S.A.
Panama City
Panama
Panama
Akzo Nobel Coatings S.A.
Casablanca
59.628
Papua New Guinea
Akzo Nobel Performance Coatings
Morocco S.A.R.L.
Distral Maroc S.A.
Sadvel S.A.
Myanmar
Casablanca
100
Akzo Nobel Limited
Rabat
Casablanca
59.608
59.625
Peru
Akzo Nobel Peru S.A.C.
Poland
Geheru
Lima
Akzo Nobel (M) Co. Ltd.
Yangon
Netherlands4
*Akzo Nobel (C.) Holdings B.V.
Akzo Nobel Assurantie N.V.
Woerden
Arnhem
*Akzo Nobel Car Refinishes B.V.
Sassenheim
*Akzo Nobel Coatings International B.V.
Arnhem
*AKZO Nobel Decorative Coatings B.V.
Sassenheim
*Akzo Nobel Insurance Management B.V.
Arnhem
*Akzo Nobel Management B.V.
*Akzo Nobel Nederland B.V.
Arnhem
Arnhem
*Akzo Nobel Sino Coatings B.V.
Sassenheim
*Akzo Nobel Sourcing B.V.
*B.V. Alabastine (Holland)
Arnhem
Ammerzoden
100
100
100
100
100
100
100
100
100
100
100
100
Akzo Nobel Car Refinishes Polska Sp. z
o.o.
Warsaw
Akzo Nobel Decorative Paints Sp. z o.o.
Warsaw
Akzo Nobel Industrial Coatings Sp. z o.o.
International Paint Sp. z o.o.
Portugal
Kostrzyn
Wlkp.
Gdansk
Akzo Nobel Tintas para Automoveis Lda
Carregado
International Paint Ibéria, Lda
Tintas Titan, S.A.
Qatar
Akzo Nobel LLC
Setúbal
Maia
Doha
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Strategy | Sustainability | Leadership and governance | Financial information
197
APPENDIX
Romania
Fabryo Corporation Srl
Russian Federation
Akzo Nobel Dekor CJSC
OOO "Akzo Nobel Coatings"
OOO "Akzo Nobel Lakokraska"
Saudi Arabia
Popesti-
Leordeni
Balashikha
Moscow
Orehovo-
Zuevo
Akzo Nobel Saudi Arabia Ltd
Dammam
Singapore
Akzo Nobel Paints (Singapore) Pte Ltd
Singapore
International Paint Singapore Pte Ltd
Singapore
Slovenia
Akzo Nobel Adhezivi d.o.o.
Ljubljana
South Africa
AkzoNobel South Africa (Pty) Ltd
ICI Dulux (Pty) Ltd
South Korea
Johannesburg
Johannesburg
Akzo Nobel Industrial Coatings Korea Ltd
Ansan
Akzo Nobel Powder Coatings Korea Co.,
Limited
Ansan
International Paint (Korea) Ltd
International Paint (Research) Ltd
Busan
Geoje City
Spain
Akzo Nobel Coatings, S.L.U.
Barcelona
Sri Lanka
Akzo Nobel Paints Lanka (Pvt) Ltd
Colombo
Sweden
Akzo Nobel Adhesives AB
Stockholm
Akzo Nobel Car Refinishes AB
Akzo Nobel Decorative Coatings AB
Akzo Nobel Industrial Coatings AB
Akzo Nobel Industrial Finishes AB
Akzo Nobel Sweden Finance AB
International Färg AB
Switzerland
Tyresoe
Malmö
Malmö
Västervik
Malmö
Göteborg
Akzo Nobel Coatings AG
Neuenkirch
Taiwan
Akzo Nobel Paints Taiwan Limited
International Paint (Taiwan) Limited
Chung Li
Kaohsiung
AkzoNobel Report 2023
100
100
100
60
100
100
100
100
100
100
100
60
100
100
40
100
100
100
100
100
100
100
100
100
100
Thailand
100
Akzo Nobel Paints (Thailand) Limited
Amphur
Pakkred
Ergon Investments UK Limited
100
Flexcrete Technologies Limited
Hammerite Products Limited
Holywell-Halkyn Mining and Tunnel
Company Limited
I C I Finance Limited
ICI Chemicals & Polymers Limited
ICI Paints (Trade Contract) Limited
Imperial Chemical Industries Limited
International Coatings Limited
International Paint Limited
International Paints (Holdings) Limited
Intex Yarns (Manufacturing) Limited
J.P. McDougall & Co. Limited
Mortar Investments International Limited
Slough
Mortar Investments UK Limited
Polycell Products Limited
Resinous Chemicals Limited
Sales Support Group Limited
Slough
Slough
Slough
Slough
Stevenston Holdings Limited
Edinburgh
United States of America
Akzo Nobel Coatings Inc.
Akzo Nobel Inc.
100
100
Akzo Nobel Services Inc.
Blue Water Marine Paint LLC
99.902
Expert Management Inc.
ICI Americas Inc.
International Paint LLC
New Nautical Coatings Inc.
Uruguay
Pinturas Inca S.A.
Vietnam
Akzo Nobel Vietnam Limited
Binh Duong
Zambia
Dulux Zambia (2005) Limited
Lusaka
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Montevideo
100
100
100
96.955
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Tunisia
Société Tunisienne de Peintures Astral S.A. Megrine
Türkiye
Akzo Nobel Boya Sanayi ve Ticaret A.S.
Akzo Nobel Kemipol Kimya Sanayi ve
Ticaret A.Ş.
Izmir
Izmir
Akzo Nobel Server Boya Sanayi ve Ticaret
A.S.
Dilovası/
Kocaeli
International Paint Pazarlama Limited
Sirketi
Marshall Boya Ve Vernik Sanayii A.S.
Tekyar Teknik Yardim A.S.
Uganda
Istanbul
Dilovasi
Dilovasi
Akzo Nobel Uganda Limited
Kampala
Ukraine
LLC "Akzo Nobel Holding Ukraine"
Kiev
United Arab Emirates
Akzo Nobel Decorative Paints L.L.C.
Dubai
Akzo Nobel ME Coatings FZE
Jebel Ali Free
Zone
60
100
51
55
100
93.609
100
100
100
49
100
Akzo Nobel UAE Paints L.L.C.
Dubai
48.979
United Kingdom
Akzo Nobel (CPS) Pension Trustee Limited Slough
Akzo Nobel (NASH) Limited
Akzo Nobel (NSC) Limited
Slough
Slough
Akzo Nobel Aerospace Coatings Limited
Slough
Akzo Nobel CIF Nominees Limited
Akzo Nobel Coatings (BLD) Limited
Akzo Nobel Coatings Limited
Slough
Slough
Slough
Akzo Nobel Decorative Coatings Limited
Slough
Akzo Nobel ICI Holdings
Akzo Nobel Industrial Coatings Limited
Akzo Nobel Limited
Slough
Slough
Slough
Akzo Nobel Packaging Coatings Limited
Slough
Akzo Nobel Powder Coatings Limited
Akzo Nobel UK Ltd
Cuprinol Limited
Dulux Limited
Ergon Investments International Limited
Slough
Slough
Slough
Slough
Slough
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Strategy | Sustainability | Leadership and governance | Financial information
198
APPENDIX
List of non-consolidated legal entities and
corporations
Colombia
Minerales Industriales S.A.S.
Sabaneta
Italy
Metlac Holding S.r.l.
Metlac S.p.A.
Alessandria
Alessandria
Ownership
%1
40
49
71.667
1 The ownership percentage represents the interest Akzo Nobel N.V. or one or more
of its majority subsidiaries singly or jointly have in the issued share capital of the
participation. The list does not include entities that are of insignificant relevance in
respect of the insight required by law, such as dormant companies and companies
in liquidation.
2 Hong Kong Special Administrative Region.
3 Akzo Nobel N.V. has declared in writing that it guarantees the commitments entered
into by Dulux Paints Ireland Limited, in conformity with section 357(1) of the Irish
Companies Act 2014.
4 With respect to the Dutch legal entities marked *, Akzo Nobel N.V. has declared in
writing that it accepts joint and several liability for contractual debts of the relevant
companies, in conformity with article 403, Book 2, of the Dutch Civil Code.
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
APPENDIX – EU TAXONOMY
199
Economic Activities (1)
Code(s) (2)
Turnover (3)
Proportion
of Turnover
2023 (4)
EUR
%
Climate
Change
Mitigation
(5)
Y; N; N/EL
(b) (c)
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Climate
Change
Adaptation
(6)
Water (7)
Pollution (8)
Circular
Economy (9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water (13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Proportion
of
Taxonomy
aligned
(A.1.) or -
eligible
(A.2.)
turnover,
2022 (18)
Category
(enabling
activity) (19)
Category
(transitional
activity) (20)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
N/A
Turnover of environmentally
sustainable activities (Taxonomy-aligned) (A.1)
Of which enabling
Of which transitional
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
N/A
Turnover of Taxonomy- eligible but not
environmentally sustainable activities (not
Taxonomy-aligned) (A.2)
Total (A.1 + A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy- non-eligible activities (B)
Total (A + B)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€nil
€10,668 mln
€10,668 mln
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N
N
N
N
N
N
N
N
N
N
N
N
N
N
—%
—%
—%
—%
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
—%
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
0
—%
100%
100%
N/A
N/A
N/A
N/A
—%
—%
—%
—%
—%
—%
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
APPENDIX – EU TAXONOMY
200
Economic Activities (1)
Code(s) (2)
CapEx (3)
Proportion
of CapEx
2023 (4)
EUR
%
Climate
Change
Mitigation
(5)
Y; N; N/EL
(b) (c)
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Climate
Change
Adaptation
(6)
Water (7)
Pollution (8)
Circular
Economy (9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water (13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Proportion
of
Taxonomy
aligned
(A.1.) or -
eligible
(A.2.)
CapEx,
2022 (18)
Category
(enabling
activity) (19)
Category
(transitional
activity) (20)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
N/A
CapEx of environmentally
sustainable activities (Taxonomy-aligned) (A.1)
Of which enabling
Of which transitional
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Production of electricity from solar PV
Water collection, treatment and supply
Construction of new buildings
CapEx of Taxonomy- eligible but not
environmentally sustainable activities (not
Taxonomy-aligned) (A.2)
Total (A.1 + A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy- non-eligible activities (B)
Total (A + B)
N/A
N/A
4.1
5.1
8.1
N/A
N/A
N/A
N/A
€1 mln
€1 mln
N/A
€2 mln
€2 mln
€486 mln
€488 mln
—%
—%
—%
—%
<1%
<1%
—%
<1%
<1%
>99%
100%
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N
N
N
N
N
N
N
N
N
N
N
N
N
N
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL
EL
EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N/A
N/A
N/A
N/A
—%
—%
—%
—%
<1%
<1%
1%
1%
1%
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
APPENDIX – EU TAXONOMY
201
Substantial Contribution Criteria
DNSH criteria ('Does Not Significantly Harm')
Climate
Change
Adaptation
(6)
Water (7)
Pollution (8)
Circular
Economy (9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water (13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
Safeguards
(17)
Proportion
of
Taxonomy
aligned
(A.1.) or -
eligible
(A.2.)
OpEX, 2022
(18)
Category
(enabling
activity) (19)
Category
(transitional
activity) (20)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y; N; N/EL
(b) (c)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E
T
Climate
Change
Mitigation
(5)
Y; N; N/EL
(b) (c)
N/EL
N/EL
N/EL
N/EL
N/EL
N/EL
N
N
N
N
N
N
N
N
N
N
N
N
N
N
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
EL; N/EL (f)
N/EL
N/EL
N/EL
EL
N/EL
N/EL
N/A
N/A
N/A
N/A
—%
—%
—%
—%
—%
—%
—%
Economic Activities (1)
Code(s) (2)
OpEx (3)
Proportion
of OpEx
2023 (4)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
N/A
OpEx of environmentally
sustainable activities (Taxonomy-aligned) (A.1)
N/A
N/A
Of which enabling
Of which transitional
A.2 Taxonomy-Eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities)
Remediation of contaminated sites and areas
OpEx of Taxonomy- eligible but not
environmentally sustainable activities (not
Taxonomy-aligned) (A.2)
Total (A.1 + A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy- non-eligible activities (B)
Total (A + B)
EUR
%
N/A
N/A
N/A
N/A
€11 mln
€11 mln
€11 mln
—%
—%
—%
—%
3%
3%
3%
€384 mln
€395 mln
97%
100%
AkzoNobel Report 2023
Strategy | Sustainability | Leadership and governance | Financial information
202
COLOPHON
Disclaimer
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information provided by specialized external agencies.
AkzoNobel Report 2023
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